
Class. 1M. 

Book 3AI 

Copyright If 

COPYRIGHT DEPOSIT. 



THE IMPENDING CRISIS 

OR 

PROSPERITY ANALYZED 



THE IMPENDING CRISIS 

OR 

PROSPERITY ANALYZED 



BY 



GEORGE WHICHELLO 



NEW YORK AND WASHINGTON 
THE NEALE PUBLISHING COMPANY 

1904 



LIBRARY of CONGRESS 
Two Conies Received 

MAY 3 1904 

CoDyrigrht Entry 

huu/i 3 - "* v + 

CLASS a- xXc. No. 
8 £> o L, n 
COPY B ' 






COPYRIGHT, 1904 

BY 

THE NEALE PUBLISHING COMPANY 



CONTENTS 



CHAPTER PAGE 

Introduction 7 

I. What Must Happen n 

II. Employer and Employed 17 

III. Who Pays the Taxes 23 

IV. Governmental and Bank Currency 31 

V. Panics— Their Causes and Cure 47 

VI. The True Theory of Currency 59 

VII. Wages and Price 73 

VIII. The Theory of Interest 87 

IX. The Rights of Man 9 6 

X. Alien Landlordism and its Remedy 106 

XI. Conclusion 120 



INTRODUCTION 



The new century has begun and the Ameri- 
can people find themselves first among the 
family of nations— a land flowing with milk 
and honey, a people born to genius and renown, 
a system of government theoretically estab- 
lished upon the brotherhood and equality of all 
men. With these attributes of greatness the 
student of history could, with no show of 
vanity or boasting, predict a future even more 
glorious than any period the past has ever 
disclosed. 

No period of the world's history can stand 
comparison with the present. In material pro- 
duction, in the arts, in science, literature and 
invention we have outrun the most extravagant 
predictions. With the increased inventions 
which annihilate time and space, the world m 
a certain sense has become smaller and smaller. 
What was new yesterday is old today. Ideas 
and traditions which had held for centuries 
have been seen to vanish before the spirit o L 
investigation and discovery. The torch of rea- 



5 INTRODUCTION 

son has spread a light wherever it has appeared, 
and yet it has scarcely begun to do its work. 
In both the inorganic and organic sciences 
wonders have been performed, and these, too, 
in the face of ignorance and superstition. 

We turn for a moment from the picture — 
from a picture where science is steadily ad- 
vancing to a picture where government still 
wears the ancient garb of privilege, slightly 
altered, to the modern style of expediency. 
We have seen what has been done ; let us learn 
what is yet to be done. 

The political horizon looks dark and lower- 
ing, charged with the electricity of coming 
events. Much has been done in the halls of 
legislation for monopoly and privilege, but 
little for humanity. Beggars walk our streets, 
tramps throng our highways and prisons and 
almshouses are filled to overflowing. Already 
there loom up in the distance the signs of 
another social and industrial paralysis. The 
efforts of politicians to give us a true system 
of political philosophy have been futile, while 
their slavish submission to organized wrong 
is but hastening the day when the last straw 
shall have been put upon the camel's back and 
patience shall have ceased to endure. 

The feeling of unrest which pervades all 
classes of society is a potent suggestion that 
something is wrong — something is lacking in 



INTRODUCTION 9 

our national organization to make us a happy, 
harmonious unit. Political freedom has gen- 
erally been admitted, but those political som- 
nambulists who think that this is the end and 
aim of government have yet to learn that there 
can be no permanent political rights until the 
rights of man to his natural inheritance — the 
earth — has been established. 

If history teaches us anything, it teaches that 
the concentration of wealth in the hands of the 
few has invariably been the great cause of the 
destruction of free government. We trace the 
history of the great nations of the earth — of 
Egypt, Babylon, Greece, Rome — their origin 
existing only in fable and story. Communities 
form, governments are instituted, they flourish 
for a while, do their work, decay and die. The 
story of one is the story of all. The thought- 
ful man asks himself the question : Is this all 
there is of life? Are we similarly to play our 
part in the world's great drama? 

Behold in France, a century ago, that awful 
tragedy, the natural consequence of ignorance, 
oppression and wrong, when the pent-up indig- 
nation of hundreds of years broke forth and 
spread such awful havoc as the modern world 
had never seen. See in our own country, a 
little more than a generation ago, the inevitable 
result of one man attempting to own another; 
when one million lives were sacrificed to abolish 



IO INTRODUCTION 

that cursed institution — chattel slavery. But 
slavery is not abolished. The form of our serf- 
dom has merely undergone a change. Indus- 
trial slavery is still here in all its horror, wreck- 
ing the lives of thousands every day, enslaving 
woman, robbing childhood of its joys, and 
making beasts and liars of honest men. 

This book is a protest against existing con- 
ditions, and is written with the hope that it may 
arouse the people from their lethargy and 
awaken them to a knowledge of what awaits 
them if something is not done soon. It will 
offer them a prosperity which is easily within 
their power to obtain, the author firmly believ- 
ing that no prosperity is genuine unless it is 
enjoyed by all. 



THE IMPENDING CRISIS 

OR 

PROSPERITY ANALYZED 



CHAPTER I 

i 

WHAT MUST HAPPEN 

A crisis is inevitable. The human mind is 
so constituted that it remains in a state of 
lethargy until it is nerved to action by force of 
circumstances — by events. Men of ordinary 
mental capacity do very little reasoning. Their 
minds are swayed by events. It has never yet 
been given to any man to exactly foretell the 
future, yet we may know, if we can know any- 
thing, that punishment is sure to follow every 
violation of Nature's laws. 

As it is with the individual, so it is with the 
nation. We cannot on the one hand be telling 
men that they are equal before the law, and 
then deny them the equal opportunity to make 



12 THE IMPENDING CRISIS 

an honest living. It would seem just if one 
should propose that the workingman should be 
the rich man, and yet in this great republic of 
ours we have the sorry spectacle of the work- 
ingman being the poor man. Surely there 
must be something wrong. By the term 
"workingman" is meant every one who by 
brain or brawn gains his living by honest labor, 
either in the producing of wealth or rendering 
service for service. It may be contended that 
the American workmen retain more of the 
fruits of their labor than do those of any other 
nation. Even if this were so, they will not be 
content, and justice will not be done until they 
retain all the fruits of their labor. As each 
year passes by the worker finds that more and 
more is being taken from him to meet the exac- 
tions of class legislation, and that it will be but 
a matter of a few more generations before he 
will be in as sad a plight as the toilers of 
Europe. He is not only burdened with the 
support of an aristocracy at home, but he must 
support one in Europe. It has been estimated 
that fully two hundred millions of dollars are 
paid each year to foreign landlords by Ameri- 
can citizens merely for the privileges of living 
and working in their own country, and this 
does not include dividends and interest on 
watered stocks held by European capitalists. 



WHAT MUST HAPPEN 13 

But in a republic why should there be an 
aristocracy ? This word was at one time hate- 
ful to every American, but during the last 
twenty-five years, by our close relations with 
Europe and by the marriage of the daughters 
of our millionaires to titled foreign fops, we 
have come to regard the word with indiffer- 
ence, even with respect. In a true republic 
there should be no aristocracy but a working 
aristocracy. All other aristocracies have their 
basis in some special privilege, such as the 
possession of the land, and the consequent 
appropriation of ground rent. What does the 
landlord, as landlord, do for the happiness of 
mankind, for the furtherance of civilization? 
Nothing whatever. He does not render serv- 
ice for service. He creates no wealth. In 
every instance he is an obstacle to progress and 
to the production of wealth. He is an earthly 
god, forming the habits and environments of 
his fellow creatures. A system which allows 
one man to levy tribute upon another man for 
the privilege of living on God's earth is a sys- 
tem born of evil. There is no good in it and 
we can never have a science of government 
until we get rid of this land monster. 

There are those who, because they them- 
selves are enjoying a little prosperity, imagine 
that every one else is doing the same. They 
seem to think that because they have a full 



14 THE IMPENDING CRISIS 

stomach no one else ever feels the pangs of 
hunger. They are generally of the "upper 
ten" — the "upper crust" — and do not see the 
writhing mass of humanity beneath, a great 
part of whom scarcely know where the next 
meal is coming from. There are girls and 
young women in our large cities whose wages 
amount to but forty or fifty cents per day. It 
should be a cause of wonder that women can 
maintain their honor upon such wages. Truly 
our wage system is not very conducive or 
encouraging to morality. If we could count 
the thousands that are born into this world to 
lead a life of vice and crime we would stand 
aghast in horror. If we could feel the anguish 
and despair which are the constant companions 
of these poor souls, our hearts would melt with 
pity. And yet what is pity without a remedy ? 
Our social system is the manufactory of crime. 
We must know that poverty is the greatest of 
all the generators of crime. Involuntary pov- 
erty, enforced idleness — these are the harbin- 
gers of evil. We cannot hope to reform the 
world by building jails, prisons and alms- 
houses ; by establishing soup kitchens and char- 
itable institutions. We cannot continue to run 
the world on charity. Mankind wants no gifts. 
It is not fair that we should insult him with an 
offer of alms. Mankind wants justice. Man 
wants an opportunity to employ himself freely 



WHAT MUST HAPPEN 15 



in those bounties of nature which our Heavenly 
Father has so abundantly bestowed upon him. 
In our Bible we say, "The earth hath He given 
to the children of men;" but in actual practice 
we say, "The earth hath He given to some of 
the children of men." There is room enough 
for all, and there would be happiness for all 
were it not that we, through foolish pride, 
through lust for gain and self-aggrandizement, 
cut each other's throats to gain a stepping-stone 
to an ephemeral greatness. There is room 
enough in these United States for the entire 
population of the earth, and yet with the popu- 
lation we have, hard times and starvation are 
no strangers here. If the forces of nature were 
not forestalled and monopolized by a few, if 
the land were not held out of use by paper titles, 
wealth would be created in abundance and there 
would be no idle hands, no starving mouths. 

The cry has been raised by some, that there 
are too many people in the world. Just think 
of the blasphemy of the idea that God sends 
more mouths into the world than He can feed ! 
The earth may be likened to a ship, upon which 
we are all travelers and sojourners. Would 
any sensible captain put to sea without thor- 
oughly provisioning his vessel for the voyage? 
This would be mere human wisdom. And yet 
we are ever ready to accuse some one else, and 
so, to ease our own shoulders, do not hesitate to 



1 6 THE IMPENDING CRISIS 

accuse and blaspheme the Almighty. Can any- 
sane man suppose that an all-wise Father has 
placed us on this globe and set us adrift 
through infinite space without providing for all 
of his children ? It is not God's inhumanity to 
man ; it is man's inhumanity to man. It is our 
own niggardliness, not the niggardliness of 
nature. It is our own injustice to each other, 
and because we persist in violation of God's law 
that these evils are upon us. A prophet of old 
has summed up the whole matter by saying, 
"Cease to do evil, learn to do good." 






CHAPTER II 

EMPLOYER AND EMPLOYED 

We hear a great deal about employer and 
employed, of capital oppressing labor, and 
much other vague and indefinite stuff. In the 
actual scientific meaning and in a just and 
equitable condition of society, we are all em- 
ployers of each other, and land is the constant 
and ultimate employer of us all. To say that 
A employs B is only half the truth, because A 
is directly or indirectly employed by B, other- 
wise there could be no equation of exchange. 
A merchant, for instance, in starting a store 
employs clerks ; but is not the merchant, in the 
broader sense of the term, an employee also? 
Does he not perform a service for the com- 
munity, and in so doing is he not an employee 
of the community? To perform an exchange 
two parties are necessary — two parties must 
necessarily be employed; but when one is con- 
tinually giving without receiving and the other 
continually receiving without giving, it is self- 
evident that this is not exchange, but simply 
robbery. Exchange bears a natural relation- 



l8 THE IMPENDING CRISIS 

ship to employment. It is the final act of 
human labor to complete production, and any 
restriction or interference with the working of 
this vast piece of living machinery will react on 
the market of employment so as to depress 
wages, diminish production, make the rate of 
interest fluctuate, and have a constant tendency 
to produce panics and hard times. Instead of 
obtaining the maximum of production with the 
least expenditure of human effort, in nature's 
way — that is, with the union of free capital and 
free labor — we experience a condition of great 
injustice, in which capital and labor are both 
shorn of their productive power. 

If capital is not free to be employed by labor, 
then how can labor be free ? 

Every dollar of tax which is put upon capital 
diminishes the productive power of labor, for 
the taxes, which are generally supposed to 
be paid by the capitalist, are shifted to the 
shoulders of labor and wages are made that 
much less. 

We speak of capital oppressing labor, but in 
actual fact the statement is entirely erroneous, 
being based upon a false conception of the ele- 
ments that constitute political economy. Capi- 
tal is not a primary element in production, such 
as land or Tabor. Capital is a creation of man. 
Now, how is it possible for the creature to 
oppress its creator ? It is entirely unphilosoph- 



EMPLOYER AND EMPLOYED 1 9 

ical to suppose that such could be the case. 
When we speak of capital oppressing labor we 
are "barking up the wrong tree" and assuming 
the effect to be the cause. Capital under nat- 
ural conditions is the hand-maid of labor — the 
means to an end. 

What in common acceptation is the employer 
is, in the light of reason, the employed — for 
capital does not employ labor, but on the con- 
trary, it is labor which employs capital. To-day 
capital is divorced from labor because labor 
is divorced from the land. The difficulty lies 
in the inability to distinguish the apparent from 
the real. The real conflict is not between cap- 
ital and labor, but between landlordism and 
labor. Labor accuses capital of wrongs which 
are the natural result of landlordism, and capi- 
tal retaliates by accusing labor of wrongs which 
are also the result of landlordism. We must 
not forget the fact that labor and capital are 
both alike oppressed by the land monopolist and 
that the oppression itself is the natural expres- 
sion of our vicious land policy. 

That policy is private property in land. If 
the earth, the mother of us all, can justly be 
private property, then man must be private 
property. But since man cannot in justice be 
private property, then the earth cannot in jus- 
tice be private property. 



20 THE IMPENDING CRISIS 

Between landlord and capitalist there is a 
vast difference. A man may be a land owner 
and yet not possess a dollar of capital, or a man 
may be a capitalist and yet not possess a foot of 
land. 

Every trust formed is in the last analysis 
a species of land monopoly, and its power to 
oppress is inherent in that fact alone, for no 
monopoly can work any severe or lasting injury 
which does not rest upon the private monopoly 
of some natural opportunity. 

In the strikes against the steel and coal trusts 
the companies are not the losers, for they reim- 
burse themselves by advancing the prices on 
what the people must have, and the general 
public pays the entire bill, the cost of the strike 
included. The trust system is the natural 
result of our system of taxing labor, and if the 
system could be carried to its logical conclusion, 
one man could own the whole earth and the rest 
of the inhabitants would be his tenants. Thus 
the question of employer and employed is re- 
duced by the reason to its farthest possible 
limits. Every question affecting the employ- 
ment of labor, every question of tariff, every 
question of finance or of public revenue in gen- 
eral is in the last analysis a land question. 

To-day, amidst all the strife and contention 
in the industrial world, we see the hideous spec- 
tacle on the one hand of landlords combining to 



EMPLOYER AND EMPLOYED 21 

secure a monopoly of production and on the 
other hand of trades unions combining to 
secure a monopoly of employment. Neither 
system belongs to the grand economy of 
nature; both are subterfuges invented by man 
to escape the wrong engendered by his deliber- 
ate violation of the laws of the universe. With 
freedom of opportunity for self -employment, 
the evils associated with trusts and trades 
unions would vanish. 

Landlords and politicians are very shrewd in 
rilling the press with all sorts of plans for recon- 
ciling capital and labor, thus fostering the im- 
pression that capital and labor really are in con- 
flict. Their real purpose is to divert public 
attention from the real cause and thus make 
themselves secure in their present position. 
Such men profess anxiety that capital and labor 
shall be on more friendly terms; that strikes 
and lockouts shall be made impossible. Take 
the average corporation employee, who in most 
cases is compelled to live a cramped and unde- 
veloped life. Why is he forced to overwork 
himself, to ruin his health and shorten his life, 
and live in such conditions as to make his feel- 
ings toward his employers that of hatred rather 
than of friendship? Why do these pretended 
peacemakers persist in all this hypocritical talk 
when they themselves possess the power and 
opportunity to bring about the conditions for 



22 THE IMPENDING CRISIS 

which they profess such an ardent desire? The 
employee cannot hold in esteem men, who in 
their relation to him appear as one thing-, and 
in their relation to the general public appear 
as something entirely different. Organized 
hypocrisy is everywhere breeding anarchy and 
crime. The suggestions and methods of rich 
men are wholly impotent to cure the corruption 
of to-day. Their suggestions, summed up, 
amount to saying: "Yes, I believe that steal- 
ing is wrong, but please do not stop me from 
stealing. I believe in the equality of all men, 
but please do not make me equal with other men 
by taking my special privileges from me." 

Let us not be deceived into thinking that 
capital oppresses labor and that labor must wait 
for capital to employ it. Neither one has more 
than land monopoly will give it. Remove this 
great obstacle. Then labor and capital will 
work in harmony and with renewed force. 
The frequent dissensions that exist between 
employees and their employers would cease, 
and thus in peaceful security we would pave the 
way for that permanent prosperity, "when they 
shall sit every man under his vine and under 
his fig tree and none shall make them afraid." 



CHAPTER III 

WHO PAYS THE TAXES? 

The American people must learn that the 
price of labor is determined in the same way 
that the price of any commodity or product of 
labor is determined, namely, by the law of 
supply and demand. When the supply is 
abundant and there is no demand, then the 
price falls. When the supply is small and the 
demand is great, then the price is high. 

Let us take the case of a clerk in any large 
corporation, and let us, for illustration, call him 
John. John is getting a salary of, say $50 per 
month as bookkeeper, copyist, stenographer, or 
for some similar work. As he grows older he 
finds that he has new wants, new needs, and 
has probably reached a marriageable age, and 
has begun to think seriously upon the subject. 
He goes to his employers and asks if he cannot 
have an increase in his wages, saying that he 
has been with the company a considerable 
length of time and has done good work, and 
winds up by saying that he is deserving of more 
pay. His employers listen to him respectfully, 



24 THE IMPENDING CRISIS 

but at the same time fully realize the disad- 
vantage of John's position in the matter and 
the advantage of their own position. They 
may be men who, under certain circumstances 
and conditions, would be actuated by the 
noblest instincts. But what are these 
when we are dealing with dollars and cents. 
They may be charitable enough even to grant 
the request of John and add a few dollars to 
his pay. But they need not do this if they do 
not choose to do so. They can plainly tell John 
that they can get plenty of young men who 
zvould be glad to do this vuork for $30 or even 
less per month, and that if he is not satisfied 
with his position he can step down and out. 
John sees that further argument is wholly 
unnecessary and walks away thoroughly dis- 
couraged. Now, then, is it not clear to you 
that you cannot hope to demand better wages 
so long as there is another man waiting to take 
your place at the same or even less wages than 
you yourself now receive ? The principle to be 
deduced from this is that it is the idle man who 
determines the wages of the man that works. 
Let us get that idle man employed, and then we 
will be in a position to demand a just wage. 
The idle man is the dangerous man to society. 
But why are there idle men? Why should 
there be any involuntary idleness ? The answer 
to the above questions is found in our vicious 



WHO PAYS THE TAXES? 25 

system of taxation, for by that system we make 
employment scarce, and with the constant in- 
crease of population men are forced to compete 
with each other at starvation wages. 

Let us take another illustration and show 
how our present system of taxation works, and 
how it is responsible for the condition that con- 
fronted John. We have large manufacturers 
in this country who say that they are heavy tax- 
payers. The fact is that they are not at all. 
They do not pay the tax ; they simply advance 
it, and the tax which they have paid is added 
to the cost of producing the article. The next 
man who handles it adds his profit to the selling 
price, and so on, each man adding his profit 
until it reaches the consumer, who foots the bill. 

Thus far we see that it is the consumer who 
pays all the tax and not the manufacturer. But 
let us carry the analysis still farther, and we 
shall see that by the same operation the poor 
man must not only pay the tax, but that his 
wages, with which he must pay it, are made 
smaller. When we tax an article we naturally 
make it dearer; when we make it dearer the 
demand for it slackens; when the demand 
slackens the production slackens, and when 
production slackens, those who were employed 
in its production are thrown out of work. 

It is frequently asserted that only those are 
taxpayers who own real estate and pay a tax to 



26 THE IMPENDING CRISIS 

the assessor. In actual fact every one who 
buys anything is a taxpayer and an employer 
of labor. When a person makes a purchase he 
must be taxed if any portion of the product or 
any agency in its production has been taxed. 
This ought to be clear, even to the most untu- 
tored. But there is a class of high-flown 
economists who will not listen to a simple 
explanation, but would rather insist upon the 
dogmas and superstitions of an antiquated sys- 
tem of political economy and who would have 
us believe that the way to raise wages is to 
impose a protective tariff upon the people. 
This is not an age of miracles, but an age when 
men are supposed to use their common sense 
and their reason. We are taught that when 
we levy a tax upon imported goods the for- 
eigner pays the tax, when it is very plain that 
he does not pay the tax, but that we ourselves 
pay it. 

A tax upon imports is virtually a tax upon 
exports. We will take the case of a farmer 
who is shipping his wheat to some European 
port, Liverpool, for instance. We speak of 
selling our goods when we really mean ex- 
changing our goods. Very little money, com- 
paratively, changes hands. It is an exchange 
of commodities. The wheat arrives in Liver- 
pool and is exchanged as soon as possible for 
other goods of Europe. There has been no tax 



WHO PAYS THE TAXES? 27 

upon the goods leaving America, but the 
moment their equivalent arrives at the Custom 
House in New York the farmer discovers that 
twenty-five per cent of his goods is confiscated. 
Imagine a robber who meets you on the street 
and demands one-fourth of your daily wages 
and the civil law should justify both his 
demand and the execution of it. Would not 
that be parallel to the present tariff system 
which robs a man under the plea of protecting 
him? Again, it is claimed that high tariff 
means high wages, and low tariff means low 
wages. I suppose that if they carried their 
theory to its conclusion no tariff would mean 
no wages at all. 

Let us see if the notion of the high tariff 
advocates holds good. Steel can be imported 
from England for twenty dollars per ton, but 
the law levies a tax upon it of eight dollars per 
ton. This shuts out English steel and enables 
the manufacturers in this country to charge 
eight dollars more for their goods. Of course 
our steel manufacturers are all in the business 
for their health, and are men of such a chari- 
table nature that they immediately convert this 
extra eight dollars, which the law gives them, 
into wages for their workmen. To call a fool 
a Solomon would be irony, but to say that the 
Steel Trust converts this eight dollars per ton 
into wages for their employees is as black a 



28 THE IMPENDING CRISIS 

lie as was ever propagated by any political 
party. When the workman goes to demand 
his share of the increase in the tariff he is told 
by his employer that there are plenty of men 
waiting to take his place, and if he doesn't like 
his present wages he can step down and out. 
The thought of a wife and little ones at home 
causes the laborer to reflect. 

Who pockets the eight dollars? Who is 
protected ? 

"Protection !" A tariff is an impediment, 
a hindrance to exchange. That which hinders 
exchange prevents the production of wealth; 
that which prevents the production of wealth 
diminishes the chances for employment and in 
consequence depresses wages. When wages 
are depressed the buying capacity of the people 
is diminished, and the final outcome is "busi- 
ness stagnation." If a tariff is a good thing, 
then the higher the tariff the better it will be 
for us, and its ultimate good would not be 
realized until everything that is exchanged 
between nations bore a tax to the highest possi- 
ble limit. If a tariff is a good thing, then we 
should have a tax upon everything that is taken 
from one State of the Union into another State. 
If, on the other hand, a tariff is a bad thing, 
then the less we have of it the better it will be 
for us. There is no half-way ground to take, 
foi it must be either right or wrong. If the 



WHO PAYS THE TAXES? 29 

hypothesis of protection as a political doctrine 
be true, then it should be true in its entirety; 
and if exceptions be found which show a falsity 
in particular, then it is false in the whole. 

The balance of trade is nominally always 
against Europe, but actually against the United 
States ; for if the United States sends two hun- 
dred million dollars' worth of merchandise to 
Europe, and Europe sends a hundred million 
dollars' worth of merchandise to the United 
States, then Europe is indebted to the United 
States to the extent of one hundred million 
dollars. Now, since the United States is not 
in the habit of giving things away there are 
only two conditions that could possibly hold — 
either Europe sends us one hundred million 
dollars in specie or else that amount is already 
due her as dividend and interest on investments 
in this country. As Europe does not send 
money to us, but on the contrary it is we who 
are always sending money to Europe, the sec- 
ond condition is the only one that can be true. 
It is astonishing that the average American 
will boast of such a condition. There can be 
no reason for such boasting except ignorance. 
After a careful survey of the tariff question 
how pre-eminently absurd does the balance of 
trade fallacy appear. 

The government bond system inaugurated 
during the Civil War is one of the methods by 
which millionaires and paupers are made, and 



30 THE IMPENDING CRISIS 

a protective tariff is another. Government 
bonds, bank currency, protective tariffs, special 
privileges — these are kingly institutions and 
are incompatible and destructive to a republi- 
can form of government. Kings have never 
lacked arguments to defend the existing order 
of things, and politicians of to-day are of the 
same breed and stamp. 

Must we close our eyes to the downward 
tendency which has already begun and which 
will continue with an accelerated momentum 
each year? I anticipate that I will be called 
"pessimist" by those who are ever ready to 
label others with the badge of their own con- 
ceit. Is it pessimism for a physician to affirm 
the presence of disease in the human organism, 
and would it be pessimism for a sociologist to 
affirm the existence of disease in the social 
organism — society? Is it pessimism honestly 
to admit the existence of evil and to take steps 
towards its abolition? 

The evils under which we suffer are entirely 
of our own making, and will never be removed 
so long as by our social system we reward 
falsehood and put a penalty upon truth. Free- 
dom — social, political and industrial — this 
must be the basis for the new political economy. 
Without it no democratic theory of govern- 
ment can be constructed, and with it the civili- 
zation that is will appear as the Dark Ages to 
the civilization that shall be. 



CHAPTER IV 

GOVERNMENTAL AND BANK CURRENCY 

Various substances have served man as a 
medium of exchange in his slow and painful 
progress in civilization. Iron, bronze, leather, 
wampum, copper, gold, silver and various 
other things have at different times and among 
different tribes and nations served as money. 
Each may be said to represent a type of civili- 
zation, commercially at least ; and as commerce 
has advanced and improved, so the various 
monetary systems have improved. 

The utility of money has increased as the 
means of production have improved. Money, 
therefore, has been a very important factor in 
the civilization of man. The idea of money is 
associated exclusively with our material wants. 
It has nothing to do with whatever may be our 
ideas of religion or our systems of ethics, and 
yet that monetary system is best which com- 
mends itself the strongest to our sense of equity 
and fairness. It is commonly understood that 
in our present financial system we have two 
kinds of money — specie, or metallic money, and 



32 THE IMPENDING CRISIS 

paper money. The fact is, we have but one 
kind of money, namely, "metal." Paper — or 
token — money is not real money under our 
present monetary system. It is an order for, 
or a promise to pay, money. It is not here 
contended that the greenback system of cur- 
rency was an unsound medium of exchange — 
indeed, it is the view of the writer that it was 
the best we have ever had — but it is the pur- 
pose here merely to show that metallic money 
is the only money recognized in the financial 
system, and that what is commonly termed 
paper money is not money in the true sense at 
all. By recent legislation gold has been made 
our standard of monetary values. 

If any ordinary person, unacquainted with 
our financial history, were to attempt to un- 
ravel the mysteries of the United States note, 
coin note, the silver certificate, greenback, gold 
certificate, etc., he would find that in many 
cases their monetary value had been determined 
by the arbitrary ruling of some Secretary of 
the Treasury. Our note system is anything 
but scientific; in fact, it is a depreciated cur- 
rency from the very start. The United States 
note has this exception clause on the back 
which limits its utility and vitiates its true 
character as money : "This note is a legal ten- 
der at its face value for all debts public and 



GOVERNMENTAL AND BANK CURRENCY 33 

private, except duties on imports and interest 
on the public debt." 

But how came this mischievous clause upon 
the people's money? When the Government 
borrowed funds to carry on the Civil War it 
was induced by the lenders — or bondholders, 
through their agents — to put the above quoted 
clause upon each note in order to insure the 
redemption of the bonds and the payment of 
the interest thereon in gold. The mere pledge 
of the good faith of the Government which the 
people at large took was not deemed sufficient 
by the bankers and the privileged classes who 
purchased the bonds. They must have some 
special security, some special favor, or the 
American republic could go to pieces. Through 
the operation of this "gold clause," as it is com- 
monly termed, the available gold of the country 
soon passed into the possession of the bankers. 
This gave to the bankers a monopoly in the 
handling of gold and gave to gold a preference 
over all other forms of currency. This in turn 
created an artificial demand for gold, placed 
it at a constant premium, led to the demonetiza- 
tion of silver in 1873, and was the entering 
wedge in making gold the standard of values. 

Now imagine, in the first place, the absurdity 
of a government, possessing the unquestioned 
power to tax the very shirt off a man's back, 
being forced to borrow from private individ- 



34 THE IMPENDING CRISIS 

uals. Why could it not first have raised as 
much as was possible by a graduated tax upon 
land values, and then, if that were found in- 
sufficient, have resorted to other forms of tax- 
ation ? By this method we would have avoided 
the enormous national debt under which we 
now groan, and the national bank system of 
currency would never have been inaugurated. 
In the second place our national-bank cur- 
rency system is based, not upon credits, but 
upon debits. It is upside down, wrong in its 
major premise. The National Bank Act of 
June 3, 1864, under which these banks now 
operate, provides that a national bank may by 
depositing United States bonds with the Treas- 
urer of the United States receive ninety per 
cent of their par value in notes from him, 
which notes, when signed by its president and 
cashier, pass as money as though issued directly 
by the United States Treasury itself. The 
bank lends these notes in the course of its busi- 
ness at six per cent or more per annum, accord- 
ing to the prevailing rate of interest in the 
locality, and all the while also receives interest 
on the bonds which it has deposited with the 
United States Treasurer. It therefore receives 
double interest. But this is not all. A bank 
note is a promise to pay. It reads as follows : 
•'The Blank National Bank of Blank will pay 
to the bearer on demand blank dollars." 



GOVERNMENTAL AND BANK CURRENCY 35 

Now, when a man in business makes a sim- 
ilar promise to pay — gives a promissory note — 
he pays interest, but a national bank makes a 
promise to pay and it receives interest. Clearly, 
then, a banker receives interest on his debts — 
on what he ozves. 

But let us carry the analysis a little farther. 
He who gets for nothing something produced 
by labor of another, must necessarily get it at 
the expense of the producer, and to the extent 
that the people of these United States must, 
under this system, give something for nothing, 
to that extent they are robbed. The bankers 
may contend that they pay a tax on their circu- 
lation. The fact is they do pay a small tax, a 
very small one. But that is not the point 
involved. The point is that the system would 
not be right even if they paid ever so large a 
tax. To pay a price for the privilege of doing 
wrong is not justifiable, no matter the amount 
of the price paid. A financial system that is 
susceptible, yea, even invites the trickery and 
manipulation of the so-called financiers, can 
never be correct. 

Our National Treasury has already been con- 
verted into a mere bankers' agency. What the 
bankers want for their own interest they get, 
and the people have little or nothing to say 
about it. The currency bill of the Fifty-sixth 
Congress provides that any bank upon deposit 



36 THE IMPENDING CRISIS 

of government bonds with the United States 
Treasurer may issue notes to the extent of one 
hundred per cent of the par value of the bonds. 
This extra ten per cent over the ninety per cent 
provided in the National Bank Act is one of 
the great points for which the bankers of the 
country have been working for twenty-five 
years, and it has at last been gained. 

If our present currency system is a fair and 
just one, then why do the bankers make it a 
point to get hold of all the gold, coin and legal 
tender notes that they possibly can, in prefer- 
ence to the United States silver certificates. If 
the system is correct and one note is as good as 
another, then why should there be that element 
of fear or even of discrimination ? 

What is it that gives the bank note its value ? 
Why does it pass at par in every State in the 
Union? Is it the stability of the bank which 
issues the note that gives it its currency value ? 
If that were so, why should it be necessary to 
deposit government bonds for its security ? It 
is the pledge, the bond, of the United States 
Government behind it which makes it secure. 
Now, if the United States Government must 
issue a bond in order to make the note of some 
banker good, why can it not issue the note itself 
and save the expense of issuing interest-bearing 
bonds? This would save the people millions 
of dollars in interest every year which now go 



GOVERNMENTAL AND BANK CURRENCY 37 

almost entirely into the coffers of a few rich 
people. What moral right has one generation 
to burden another with debts for its own sup- 
posed benefit ? We should pay as we go along, 
as any ordinary business man would do, and 
not allow our debts to accumulate, and thus 
mortgage posterity. 

It will be readily seen that the ultimate object 
of the bankers is to get complete control of our 
financial system by substituting bills of their 
own issue in place of a direct government issue, 
and to use the National Treasury as a machine 
to grind out notes and interest, the payment of 
which must be guaranteed by the very people 
whom they continually rob. 

The intent and purpose of the bankers to 
establish a system of currency based upon com- 
mercial securities, by means of the Fowler and 
Aldrich bills, or some other iniquitous measure, 
is clearly evidenced by the following : 

A circular sent to the bankers of the country 
by the executive committee of the Indianapolis 
Monetary Convention, January 30, 1901, 
reveals a conspiracy which, if carried into 
effect, would involve this nation in financial 
ruin. The title of it is "Our Paper Currency — 
the Need for Making It Responsive to the 
Varying Needs of Business at All Seasons and 
in All Sections." The writers of the circular 
are very "cute" in endeavoring to get on the 



38 



THE IMPENDING CRISIS 



side of authoritative ignorance and hoodwink 
the people by talking about "overproduction" 
and an "eminent economist." 

The following table will be of interest 
as showing "how rapidly money has been 
absorbed into national bank reserves in spite of 
the large amount outstanding during the last 
few years." By the term reserves is meant 
large correspondent banks located in the 
exchange centers — New York, Philadelphia, 
Boston, San Francisco, etc. These banks are, 
with the approval of the Comptroller of the 
Currency, designated as depositaries or reserve 
agencies of smaller banks throughout the 
country : 



June 30 


Money in 
Circulation 


Money in 

National 

Banks 


Net Money 
Outside Banks 


1879 


$ 818,631,793 


$134,552,439 


$ 684,079,354 


1884 


1,243,925,696 


196,448,894 


1,047,437,075 


1889 


1,380,361,649 


288,250,701 


1,092,110,948 


1891 


1,497,440,707 


310,014,348 


1,187,426,359 


1892 


1,601,347,187 


366,350,496 


i,234,99 6 » 6 9i 


1893 


1,596,701,245 


289,254,850 


1,307,446,395 


1894 


1,660,808,708 


438,93i,97o 


1,221,866,738 


1895 


1,601,968,473 


382,942,306 


1,219,026,107 


1896 


1,506,343,066 


344,213,739 


1,162,220,227 


1897 


1,640,209,519 


413,518,621 


1,226,680,898 


1898 


1,837,859,895 


470,977,127 


1,366,852,768 


1899 


1,932,484,239 


492,857,679 


1,439,626,560 


1900 


2,062,425,496 


504,194,652 


1,558,228,844 



GOVERNMENTAL AND BANK CURRENCY 39 

It will be clearly seen in the above table that 
the increase in the volume of money outside of 
national banks is not in proportion to the 
increase in volume of money inside national 
banks. In 1879 the total of money in national 
banks was about one-sixth of the total volume 
of currency, while in 1900 the total was nearly 
one- fourth. On the other hand, the total vol- 
ume of money outside of banks in 1879 was 
nearly seven-eighths of the entire volume, but 
in 1900 it was but little above three-fourths. 
During these years the total of money in the 
national banks has proportionately increased 
one-twelfth, while the total of money in the 
hands of the people has decreased proportion- 
ately one-eighth. To state the case another 
way, it is that in 1879 the volume of currency 
outside of national bank reserves was more 
than five times the total of the currency in 
national bank reserves, while in 1900 the total 
was only a little more than eight times as large. 
Further than this, since population has in- 
creased twenty-five million since 1879, the vol- 
ume of currency outside of banks is relatively 
much smaller than would at first be supposed. 

The circular above mentioned boasts of the 
bank notes being the "poor man's money." 
What we have said will show very clearly 
in what way it is the "poor man's money. 
President McKinley is quoted as saying that 



40 THE IMPENDING CRISIS 

''the party in power is committed to such legis- 
lation as will better make the currency respond 
to the varying needs of business at all seasons 
and in all sections." The circular continues: 
"It remains to be considered how these desir- 
able results shall be brought about. It may be 
advisable that the first steps taken should be of 
a moderate character in order that any defects 
in the new legislation may be cured and that 
any question as to its safety and efficiency in 
the minds of the people may be settled before 
it is adopted on a large scale." This modera- 
tion is suggested at the starting point so as to 
ward off opposition. 

The circular states that "the fundamental 
benefit of a sound, sufficient and flexible bank 
note currency is its benefit to the borrower." 
Now, right here it should be stated that a 
"sound and sufficient" system of currency can- 
not, in the very nature of things, favor one 
class at the expense of another — the lender 
rather than the borrower, or vice versa. Our 
currency system, as well as every other national 
institution, should reflect the purpose expressed 
in our national constitution, "To establish jus- 
tice" and give special privileges to none. 

The plan proposed by the national banks 
"provides for gradually meeting the need for 
new currency by authorizing these banks to 
issue notes, to be known as guaranteed bank 



GOVERNMENTAL AND BANK CURRENCY 4 1 

notes, without depositing United States bonds 
as security. The new circulation cannot be 
issued at first, however, beyond the amount of 
one-fifth .of the circulation secured by bonds, 
nor beyond ten per cent of the capital of the 
bank. This will prevent any tendency to 
unload bonds upon the market and to depress 
their price. It will indeed tend to increase the 
value of the present form of bond-secured cur- 
rency by making it a necessary prerequisite for 
obtaining the new currency. If all the banks 
in the United States having circulation secured 
by bonds on November 30, 1900, should take 
advantage of such a provision, they would be 
able to issue about sixty-two million dollars in 
additional circulating notes." This means that 
the people would deliver to the banks sixty-two 
million dollars in cash for nothing, and the 
banks would lend it back to them at interest. 

"It is proposed that this system may be 
gradually expanded at intervals of three years, 
until at the end of six years the new class of 
circulation not secured by bonds may equal 
four-fifths of the amount of bonds pledged to 
secure the existing form of circulation, but 
shall not exceed forty per cent of banking 
capital. Thus opportunity will be afforded 
during the first three years to test the principle 
of the new circulation upon a limited scale ; but 
it may be expanded at the end of that time to 



42 THE IMPENDING CRISIS 

double the amount first allowed, and within 
three years to four times the amount. This 
increase is to remain, however, under the com- 
plete control of the Secretary of the Treasury 
and the Comptroller of the Currency." And 
who will control the Secretary of the Treasury 
and the Comptroller of the Currency? Mani- 
festly, the bankers. 

"They are not required to issue the guaran- 
teed bank notes to any bank whose solvency 
and the soundness of whose judgment they dis- 
trust. The direct consent of the Secretary of 
the Treasury is required to broaden the system 
at the end of three years, and this consent may 
be refused if he is not satisfied with the work- 
ings of the system. " Fancy subjecting the 
workings of a currency system to the will of 
men owing their positions to the influence of 
the bankers. 

A recent writer on finance states the follow- 
ing : "There is now but little currency in the 
hands of the common people on which gold 
can be drawn from the banks — what we have 
is mostly bank notes and silver certificates. If 
coin, to say nothing of gold alone, were 
demanded for ordinary trade, it would at once 
cause suspension of specie payments by the 
banks ; that is, they would fail. The report of 
the Comptroller of the Currency for September 
5, 1900,* shows that 3,871 banks had an 

♦Note — Figures of 1900 inserted. 



GOVERNMENTAL AND BANK CURRENCY 43 

authorized capital stock of $630,299,000, and 
that on the same date these banks reported their 
resources at $5,048,138,000, of which their 
loans and discounts were $2,686,759,000, and 
money of all kinds in bank, $491,379,000, mak- 
ing a line of loans and discounts nearly six 
times their cash on hand. Their deposits were 
$2,508,248,000, being- over $51,000,000 more 
than five times their cash on hand. Their 
surplus and net undivided profits were 
$389,468,000, being about four-fifths of all 
their cash on hand. Had they distributed to 
stockholders their surplus and profits they 
would have had $102,000,000 with which to 
pay $2,508,000,000 of deposits more than 
twenty-five times their remaining cash." In 
other words they would have been able to pay 
one dollar in every twenty-five of their indebt- 
edness. They have been distributing profits 
for a generation, and they now warn us against 
talking about their profits for fear we will 
break that ' confidence' ' which is necessary to 
sustain business. 

"Our banking system has this inherent 
defect, viz : If all creditors of these institutions 
were to demand payment at once they must 
necessarily fail. They are doing business on 
one part money and four parts confidence, and 
confidence games are becoming unpopular. 
The remedy proposed by the money changers 



44 THE IMPENDING CRISIS 

is to increase the bonded debt and give the 
banks exclusive power to issue paper money, 
backed by the Government." 

The whole matter resolves itself into the 
question, Can we afford to repress all discus- 
sion of financial questions and imagine that 
"confidence" is all that is necessary to sustain 
business? A huge "confidence game" is an 
excellent enterprise for a few if the many are 
willing to be "taken in." 

It may be answered that the banks are sub- 
ject to examination by the Comptroller of the 
Currency, and that this compensates for their 
privilege, and further that the banks pay a tax 
upon the currency which they have issued. 

In the first place, no one who is sufficiently 
acquainted with the workings of national banks 
will suppose that a bank examiner can distin- 
guish between the good loans and the bad loans 
which a bank carries in its resources. How 
can he possibly pass accurate judgment on the 
names of men whose business and responsi- 
bility he knows nothing at all about ? In how 
many cases does the general public suppose that 
he counts all the cash in a bank ? At best, out- 
side of actual cash, he can only deal with 
figures, but as to the nature and genuineness 
of that which makes the figures he is almost 
entirely ignorant. He may perform his part 
well, and yet the process as a whole will 



GOVERNMENTAL AND BANK CURRENCY 45 

amount to little more than a mere farce in 
showing the true condition of a bank. 

In the second place, upon what idea of jus- 
tice is it that the Government levies a tax upon 
national bank currency and that the internal 
revenue law levied a tax upon the capital of 
every banking institution? Is it not the most 
absurd idea imaginable for a government to 
tax its own money and to put a penalty upon 
the employment of capital? To tax capital is 
virtually to tax labor, because capital is wealth, 
and wealth is a product of labor. Therefore, 
when we tax the product we tax the producer 
of the product, and wages are diminished pro- 
portionately. 

The foregoing analysis will explain how the 
bankers of the nation have been encroaching 
for thirty years, little by little, upon the rights 
of the people, and how a few are made rich at 
the expense of the many. They begin their 
villainy in a quiet, unsuspecting way. When 
they have a bill to lobby through they say it 
is for the "business interests" of the country. 
Of course it would not do to say that by the 
term "business interests" they mean their own 
interest. They are now getting so bold with 
their currency bills and subsidy bills that they 
do not hesitate to assault the goddess of the 
republic in broad daylight. 



46 THE IMPENDING CRISIS 

The business of a bank should be confined to 
receiving money on deposit and to loaning and 
discounting, and should have no connection 
whatever with the issuing of currency. While 
we are making our crusade against evil, why 
not use our common sense and stop this legal- 
ized robbery? A banker who by legal pro- 
cesses steals from another man, whether that 
man may know it or not, is just as much a thief 
as a burglar who breaks into your house and 
takes your property. We send the poor beggar 
to jail whose hunger and necessities may force 
him to take what does not belong to him, but 
pay honor and respect to the man who, caring 
nothing for the rights of others, seeks to sub- 
vert their interests to his private ends. 

It is high time we were doing something in 
this matter. Labor will not stand forever to 
be insulted and robbed. Mankind will endure 
great hardships and submit to much injustice 
before his patience is exhausted, but when that 
point is reached a change must come. 



CHAPTER V 

PANICS — THEIR CAUSES AND CURE 

Having considered the question of finance, 
we will now proceed to an examination of the 
question of panics. 

Panics seem to come and go with the regu- 
larity of clock-work. They are as much nat- 
ural phenomena and are subject as much to the 
laws of cause and effect as contraction, expan- 
sion, combustion or radiation. An effect re- 
quires a cause and a cause presupposes an 
effect, for until it produces an effect it cannot 
exist as a cause. Panics are effects; they are 
the natural expression of accumulated wrong. 
Now, if an effect is evil and unjust, then the 
cause itself, whatever it may be, must be evil 
and unjust. Right begets right and wrong 
begets wrong; and if we depart from this 
axiom our examination will avail us nothing. 
A scientific mind cannot believe that there is 
any part or department of nature outside the 
domain of law, and it is upon this basis that all 
analysis rests, and after we have found the 
principle or basis for our particular subject, 



48 THE IMPENDING CRISIS 

then the constructive or synthetic work begins. 
Nature knows no exceptions. 

Panics, then, are due to human ignorance 
of and to the perversion of natural law. They 
are caused primarily by the appropriation of 
ground rent by the landlord, and the conse- 
quent speculation in land values; secondly, by 
the fact that public functions (including the 
issuing of currency, means of transportation, 
communication, etc.) are owned and operated 
by private individuals, resulting in speculation 
in stocks and bonds. Other attendant causes, 
such as tariff privileges, etc., contribute greatly 
to the production of these much-dreaded de- 
pressions ; yet the two great causes enumerated 
above may be said to cover or contain in gen- 
eral terms all that can produce a panic. 

First, with regard to the appropriation of 
ground rent. Ground rent is that value which 
attaches to land by reason of population. In 
New York, for instance, the value of land is 
very great because of the tremendous pressure 
of population around a given piece of territory. 
If half of the population of New York city 
were removed to Troy, Albany or some other 
city, the land values of the place to which it 
moved would go up by leaps and bounds, while 
the land values of New York city would fall 
to a third or a fourth of what they were before 
the removal. Again, let us take the case of 



PANICS — THEIR CAUSE AND CURE 49 

Washington and let us suppose the seat of 
government to be transferred to St. Louis or 
Chicago. What would happen in Chicago or 
St. Louis, and what would happen in Wash- 
ington? Simply that the land values in St. 
Louis or Chicago, particularly in and around 
the business portions, would be greatly in- 
creased, while the value of land in Washington 
would sink to a mere fraction of its former 
value. The removal of the Capital would mean 
that thirty odd thousand people would be 
thrown out of employment, or else, retaining 
their employment and removing with the 
seat of government, the population would be 
diminished by thirty odd thousand employees 
and their families. The National Government 
also puts in circulation in Washington every 
month about $2,000,000 cash, which is no 
small contribution toward the maintenance of 
business in the nation's Capital. But with the 
removal of the seat of government both the 
people and the money would disappear, the 
demand for land would diminish and in con- 
sequence its value would fall. 

Now if the value of land is great where the 
number of people upon it is great, and small 
where the number of people upon it is small, 
then it is self-evident that population is the 
cause of the value in land for business and 
resident purposes. Ground rent, therefore, is 



50 THE IMPENDING CRISIS 

the creation, not of a person, but of the com- 
munity. It is a community value. Now if by 
the natural law of property a thing or value 
belongs to him who created it, then rent should 
be taken by the community as its own legiti- 
mate creation. If allowed to be appropriated 
by private individuals, injustice is done at the 
very beginning. 

There are but two ways in which public 
revenue can be raised — either by a tax on land 
or by a tax on labor. If the community creates 
the value of land, thereby making a tax on land 
possible, and does not take this value, there is 
only one way left by which revenue can be 
raised to support government, and that is by 
a tax upon labor. Labor is taxed whenever 
the products of labor are taxed. If we tax 
labor we hinder the production of wealth to 
that extent, and in putting a penalty upon the 
production of wealth, the chances for employ- 
ment are diminished proportionately; produc- 
tion is diminished, labor is held in idleness, 
wages decline. Ground rent, on the contrary, 
increases each year, and must be paid out of a 
relatively decreased production. It is this 
enormous drain of rent every year, this con- 
tinually giving of something for nothing which 
is the principal cause why the business world 
about every ten years must put on a cloak of 
mourning. 



PANICS — THEIR CAUSE AND CURE 5 1 

Again, in land speculation. Men speculate 
in land, hoping to get rich without working. 
The speculator knows very well that if people 
occupy the land and make improvements, it will 
increase in value, though he himself may be at 
the other end of the earth. Very little of the 
land is sold for cash. On the contrary, it is 
generally deeded to the buyer on condition of 
a mortgage. Boom after boom in real estate 
is started. Men are led on and on by the 
demon of speculation, fictitious values are 
traded in as though they were real values. 
The bubble grows larger and larger. Presently 
the day of settlement arrives and men are un- 
able to pay off their mortgages. Foreclosures 
result; the creditor class pounces upon the 
debtor class; banks call in their loans; money 
is withdrawn from circulation; banks have 
runs made on them and topple over. The 
bubble bursts ; values vanish into the air. Men 
who fancied that they would soon be rich, find 
themselves poor. Rent falls and business for 
a while is at a standstill. 

Take, for illustration, the case of almost any 
land syndicate that is formed. It buys up 
large tracts of land, particularly in the suburbs 
of large cities or where there is likely to be a 
demand in the near future. The land is sub- 
divided, marked off into building lots, and held 
at prices which such lots are expected to be 



52 THE IMPENDING CRISIS 

worth five, ten, fifteen or more years hence. 
The tax upon the unimproved land is so slight 
that the speculators can well afford to hold it, 
anticipating reimbursement and large profits 
out of the price which they hope to receive 
from the next buyer. But it must be remem- 
bered that they (the speculators) do not add 
one dollar's worth of value to the land them- 
selves. Every one who buys the land and lives 
on it adds a value to it, making it easier for 
the speculator to charge a higher selling price 
and at the same time making it harder for the 
next comer to secure a home for himself. The 
land increases in value, not because it is owned 
by a speculator, but because the increase of 
population is continually making it more valu- 
able. The value which many people create one 
man puts into his pocket. Then, too, the antic- 
ipated or speculative value must be paid for 
long before the real value is created, and since 
there is no other fund but legitimate business 
out of which this false value can be paid, then 
the legitimate business world is made to suffer 
just that much. The business world not only 
supports itself, but is made to support the spec- 
ulative as well. It is this continually trying 
on our part to make one equal to two that 
deranges legitimate business and makes the 
good suffer with the bad. The increasing de- 
mand for more trust companies indicates very 



PANICS — THEIR CAUSE AND CURE 53 

clearly how the rent fund is increasing and how 
incomes are made upon the basis of values 
which do not yet exist, thereby diminishing the 
fund of wages. 

It is idle to say that rent has not increased in 
the last five years. The apartment house fully 
testifies to the fact of increase. Building lots 
of twenty-foot front which up to five years ago 
produced from twenty-five to fifty dollars per 
month are now, with the two and three-story 
flat buildings producing double and treble those 
amounts. And this does not mean that rent in 
other localities has gone down, but on the con- 
trary it has increased too by land being made 
artificially scarce. The large apartment house — 
the modern pyramid of slavery — with its pre- 
tended show of economy, is indubitable evi- 
dence of the extent to which land speculation 
has gone. And this pretended economy is sure 
sooner or later to have its reactionary effect. 
First, by diminishing the amount of land in 
use, it will in consequence lessen the volume 
of material production and thereby make the 
opportunities for self -employment scarcer and 
scarcer. Secondly, it will affect the morals of 
the nation by robbing it of that individual and 
social spirit which is the natural concomitant 
of the family and the home. It can be truly 
said that already in our large cities the home is 
disappearing. 



54 THE IMPENDING CRISIS 

Land we are accustomed to treat as an article 
of merchandise. Can it be so treated in equity ? 
What is merchandise? A product of labor. 
Is land a product of labor? No. Then it 
cannot in equity be considered merchandise. 
Neither is land wealth; so that if we were to 
tax the value of land, we would not be taxing 
wealth. To solve this great difficulty we 
should destroy speculation in land by appro- 
priating ground rent for public purposes, and 
then the first great cause in the production of 
panics would be removed. 

The operation of public functions by private 
individuals is the second great cause of panics. 
We define as a public function any enterprise 
or business which requires the grant of gov- 
ernment power to enable private individuals or 
corporations to carry it on. The operation of 
steam railways, street railways, telephone, tele- 
graph, canal and pipe lines is a public function, 
and yet in very few instances are any of these 
great branches of industry owned and operated 
by the public at large. If our army, our navy 
and our postoffice are the business of the public, 
so are the railways, telephones, telegraph, etc. 
Whoever has control of the financial system 
and the means of transportation and communi- 
cation, necessarily has control of the reins of 
government; and if, as at present, the people 
do not control these institutions, then they do 



PANICS — THEIR CAUSE AND CURE 55 

not control the government, and in not having 
this control the first principle of republican 
government is denied. 

Let us take one of these subjects — the rail- 
roads — for illustration. We will thus get a 
better understanding of the matter, for the 
deductions derived from the facts governing 
one of these industries under the head of "pub- 
lic functions" will apply by similar reasoning 
to all. 

The steam railways, according to the fif- 
teenth annual report of the Interstate Com- 
merce Commission, are bonded and capitalized 
at $12,134,000,000. All, or nearly all, of the 
roads are mortgaged up to their full value, 
consequently the bonds represent the real or 
actual values of the roads, and it is upon this 
value alone that the railroads have the right to 
pay any moneys in return for investment. The 
stocks, we may say, are all water. They do 
not represent any actual capital invested, so 
that all dividends paid on them are robberies 
pure and simple. 

Marion Todd, in her work on "Railways of 
Europe and America," illustrates the situation 
by saying that, ''suppose a man buys a farm for 
five thousand dollars and gives a mortgage for 
the purchasing price, and at the end of the year, 
after paying all expenses and conducting the 
farm, has enough left to pay interest on mort- 



56 THE IMPENDING CRISIS 

gage. The interest he pays is his income or 
profit, because he had no capital of his own 
invested. The railroads are in the same posi- 
tion. If they have borrowed all the money 
their roads are worth, then the interest paid on 
the bonds are the dividends on the capital in- 
vested, and if they pay a dividend on their 
stock it means a double income." This is the 
true situation. This is the way in which the 
American people have been most unmercifully 
plundered during the last thirty years. 

The experience in Northern Pacific dur- 
ing the week of May 6, 1901, is but a precursor 
of what can happen and what will happen if 
we do not squeeze all of the water out of the 
railroad stocks, buy the railroads ourselves, 
and operate them, not upon a profit basis, but 
upon a self-paying basis. We give the railroad 
companies the franchises, which are worth hun- 
dreds of millions of dollars, and they give us in 
return the perpetual right to pay such tax as 
they choose to levy. When Northern Pacific 
jumped to one thousand dollars per share, we 
must not suppose that there was one thousand 
dollars of actual value or wealth created then 
and there. Allowing the stock to be legitimate 
and further allowing a reasonable rate of divi- 
dend, there was on the average nine hundred 
dollars of false value attached to each share. 
In other words, there was a nine-hundred- 



PANICS THEIR CAUSE AND CURE 57 

dollar lie in each share. When men bought 
and sold the stock there was little or no ex- 
change of real wealth, for it was impossible for 
the wealth to have been produced in so short a 
time. The whole process was gambling, and 
the people had to pay for the whole affair. But 
further, if this nine-hundred-dollar value was 
not inherent in the stock and yet had to be paid 
for, who paid it, and from what fund was it 
paid? It could not have been paid from the 
speculative world, because the value did not 
exist there. Speculative value and real value 
are opposed to each other in principle. When 
men have something, the value of which is one 
hundred dollars, and attempt to trade it on the 
basis of a thousand dollars, then there is nine 
hundred dollars of false value attached to it. 
But since this nine hundred dollars of false 
value must be paid with a corresponding real 
value, and since a real value cannot be drawn 
from an unreal value, then there is no other 
source or fund from which this nine hundred 
dollars can be paid but legitimate trade. Here 
is another case where legitimacy is forced to 
assume the responsibility for the crimes of 
illegitimacy. Honest production and trade are 
forced to bear the ills wrought by the exploits 
of the speculator and the caprice of the stock 
market; and finally the entire loss is saddled 
on the back of labor, for every dollar of the 



58 THE IMPENDING CRISIS 

entire transaction is taken out of wages, and 
the workingman, the producer, is made that 
much poorer. 

It will take but a few more experiences like 
that of the Northern Pacific, mentioned above, 
to throw the business of the country into con- 
vulsions, and if present tendencies continue we 
may expect something of this kind before many 
months have passed. 

There is but one solution of the railroad 
question and that is that the Government 
appraise the entire system at its true value 
(which is the value which it would cost to 
reproduce it) purchase the system by an issue 
of bonds redeemable at the pleasure of the Gov- 
ernment, provide a sinking fund, and each year 
retire a portion of the amount of bonds issued. 
In this way we will avert the calamities that 
stare us in the face, and which will surely come 
if we foolishly persist in our error. 



CHAPTER VI 

THE TRUE THEORY OF CURRENCY 

We have seen that our present financial sys- 
tem is a system based upon debts and not upon 
credit. To perpetuate its existence, therefore, 
the great bulk of the people must be kept in 
constant debt to the few. This evil, though 
apparently small in the beginning, increases as 
population and the demand for more currency 
increase. It will be further seen by the history 
of banking laws and facts as they exist to-day, 
that all systems of currency existing in the 
world to-day are founded upon a metallic basis. 
In this chapter we shall endeavor to prove, 
first, that all such systems are barbarous and 
embody no scientific idea ; second, that the cur- 
rency question can never be fixed until the tax- 
ation question is settled ; third, we shall offer a 
rational and equitable system to replace the 
barbarous and worn-out idea of currency based 
upon metal. 

In the first place, gold and silver are com- 
modities the same as any other product of 
labor, and, being such, must necessarily have 



60 THE IMPENDING CRISIS 

a fluctuating value. Now, how can we have 
a fixed standard of values and a just system 
of exchange if the thing by which we measure 
has a fluctuating value itself? We know that 
a yard is a yard and a foot is a foot, no matter 
whether they be pieces of string or sticks of 
wood. It is a fixed quantity. Can we say as 
much for the dollar? If so, then why such 
fluctuation in prices and interest, and why do 
panics and financial depressions come with such 
frequency ? 

A legislature deceives itself when it thinks 
that it can fix values by decreeing that a dollar 
shall consist of so many grains of gold or 
silver. Values are determined by competition, 
by supply and demand, and not by the will of 
any legislature. 

If, as has been the case, the production of 
gold outruns the proportionate increase in pop- 
ulation and the demand for its use, then the 
value of the yellow metal falls, and if the 
reverse is the case its value rises. The same 
is true of silver — in fact, of any product of 
labor. All paper money, we say, is based upon 
metallic money, or, to express it conversely, 
every paper dollar is supposed to represent a 
metallic dollar. Now, let us take every paper 
dollar in the nation and place them alongside 
of every metallic dollar. If our present theory 
(the metallic) be correct, then there should be 



THE TRUE THEORY OF CURRENCY 6 1 

on the average dollar for dollar, paper and 
metal. If there is more paper than metal, then 
there is something wrong. If this test were 
tried it would be found that out of the entire 
volume of currency about four-fifths dollars 
would be paper and one-fifth would be metal. 
And since, according to our theory of finance, 
gold only is the measure of values, then there 
is only one honest dollar in every five. The 
other four are false dollars. This four-fifths 
constitutes the bulk of bank currency, and 
through it the bankers naturally hold the con- 
trolling interest in public finance. According 
to the theory generally held, therefore, the sys- 
tem is indefensible, in that eighty per cent of 
our currency is false or dishonest money. 
Mind you, these are deductions according to 
the present theory. 

In considering the financial question we 
must not only regard it as a separate part of 
society, but must also bear in mind and view 
it as an inseparable part of the great industrial 
system itself. The various branches of indus- 
try are in their development dependent upon 
one another. The popular idea that gold 
determines values becomes a mere superstition 
when an attempt is made to reduce it to its final 
elements. What is generally believed to be the 
system of currency is merely nominally so, and 
in fact almost obsolete, for were we to depend 



62 THE IMPENDING CRISIS 

upon gold and silver to effect our exchanges 
to-day, the industrial world would die of 
strangulation. The falsity of the idea that 
gold determines values may be illustrated by 
the following: 

The purchasing power of gold in America is 
double and treble its purchasing power in the 
Philippines. If the metallic theory be correct, 
then ten gold dollars in the Philippines would 
or should purchase as much as ten gold dollars 
in America. But, on the contrary, it will pur- 
chase one-half or one-third as much. Why this 
difference? Simply because human life itself 
is the real measurer of all values, and this basic 
principle, together with the supply of and 
demand for labor, and the facility with which 
the products of labor can be exchanged, is the 
real cause for the difference in the value of gold 
in the two countries. The idea of the intrinsic 
value or the magic power of gold disappears 
when we refer the question to human necessity 
and human desire. Comparatively few of the 
articles which an American or European needs 
in the Philippines are made there, but on the 
contrary are made in Europe and America. If 
an American or European could go to the Phil- 
ippine Islands and live as the Filipinos live, his 
cost of living would be no greater than theirs. 
But this would be neither desirable nor natural. 
He wants those things to which he has been 



THE TRUE THEORY OF CURRENCY 63 

accustomed in his own country and which rep- 
resent his own civilization. The standard of 
living in the two countries is essentially differ- 
ent. If we wish to transfer the American 
standard of living to the Philippine Islands we 
would immediately make the cost of living 
there as much above the Philippine cost of 
living as the American civilization is above the 
Philippine civilization. The price of commodi- 
ties sent to the Philippines is doubled ajnd 
trebled when the cost of transfer and of tariff 
is added to the original cost of manufacture in 
their native countries. The price of labor must 
increase in order to make the commodities 
purchasable. 

The utility of our present monetary system 
is not due to the fact that it has a gold or silver 
basis, but, on the contrary, it is due to our 
improved methods of bookkeeping, accounting, 
means of transfer and communication. Bank 
checks, postal notes, drafts, etc., perform the 
function of money to-day just as really as 
gold or silver ever did, and with far greater 
efficiency. Let it be always remembered by 
legislators that the real and only function of 
money is to effect an exchange, not of itself, 
but of commodities of labor. One of the cry- 
ing needs of to-day is "more currency, a more 
expansive currency." Metallic money has 
failed and always will fail to meet the demands 



64 THE IMPENDING CRISIS 

of an ever-increasing population and of a civili- 
zation which is becoming more complex and 
more specialized. What a totally inadequate 
and barbarous system of currency fails to do at 
the present time must be done and is done by 
the agencies to which we have just referred. 
Remember always that metallic currency per- 
forms but a small part of the function which 
it is generally believed to perform. A very 
small percentage of the debts of the world are 
paid in actual coin. We can thus further see 
that by the means above referred to, that which 
formerly took weeks and months to do is now 
done in a very few hours. Science and inven- 
tion have entered into the march of civilization, 
and in a great measure have neutralized the 
shortcomings and backwardness of currency 
based upon metal. 

The backwardness which is inherent in our 
present monetary system makes itself apparent 
by the fact that whoever has control of the 
medium of exchange, that is, whoever can con- 
tract or expand its volume, must necessarily 
have a powerful influence in the increase or 
depression of both wages and price. This is 
especially true of a highly-organized state of 
society, because there very little is exchanged 
by barter, but on the contrary through a mone- 
tary or currency medium. Now since exchange 
is part and parcel of production, any interfer- 



THE TRUE THEORY OF CURRENCY 65 

ence with the exchangeable medium that will 
limit or prevent exchanges will react on the 
channels of production by limiting production, 
and in consequence depress wages. 

How does Nature determine wages? Sim- 
ply by the supply of and demand for human 
labor. How, then, does she determine the 
value of material things ? In the same general 
way — by the abundance or scarcity of the 
product, the ability or opportunity of labor to 
produce that product, and by the demand for 
its use. If diamonds were as plentiful as cob- 
blestones their value would be a mere nothing, 
but since they are greatly desired, are very 
scarce, and human life has to undergo great 
risks in order to get them, their value is very 
great. 

When one man exchanges something with 
his neighbor, he exchanges something vastly 
more than that material thing; for he ex- 
changes his labor, his intelligence, his very 
life's energy expressed in matter. 

Now in regard to the second point, that 
natural taxation must be the basis for natural 
currency. Taxation is the first economic prin- 
ciple of organized government. Society exist- 
ing in a crude, semi-barbarous condition has no 
need of a regular collection and disbursement 
of revenue. But with the advance of civiliza- 
tion society becomes organized and govern- 



66 THE IMPENDING CRISIS 

ment becomes a fact, a necessity. The institu- 
tion must be supported, and therefore taxes 
levied. Taxation, then, is to government what 
wages are to the individual. It is the food 
upon which organized society subsists. It is 
wholesome and necessary, and if correctly ad- 
ministered is the sound basis for a just govern- 
ment. But if this primary function is allowed 
to fall into private hands, landlords, corpora- 
tions and syndicates, then the major premise 
of government is destroyed, and society be- 
comes a prey to a class organized for its own 
private benefit. When we give away a fran- 
chise we give away with it the sovereign right 
of taxation, and immediately the functions of 
government are deranged. What makes the 
street railways of New York, Chicago, Phila- 
delphia, or of any large city so valuable? Is 
it because the roads represent so much actual 
capital invested in them? Not at all. In 
almost every case you will find that the actual 
capital invested is only a fraction of the capital 
as represented on paper. By far the greater 
portion of the value is in the franchise, and the 
franchise is the taxing privilege that has been 
given to the corporation. But one may ask, 
what has all this to do with currency ? It has 
a great deal to do with it. First, to show how 
government has been thrown out of gear by 
giving away its primary function of taxation; 



THE TRUE THEORY OF CURRENCY 67 

second, to show that no matter what system of 
currency we may have, it will never serve as 
a definite regulator of values until society 
assumes the exclusive right to tax its members. 

Returning for a moment to the subject of our 
national bank currency, we will easily see that 
that system itself is based upon taxation, for 
the government bond is an instrument of taxa- 
tion. The great wrong, however, consists in 
the creation of the government bond, for by 
that very act the taxing power is at once trans- 
ferred to private individuals, the bondholders. 
Government in this relation becomes a mere 
collecting agent for a few wealthy people, who 
grow richer and richer as population increases, 
society is arrayed into a debtor and a creditor 
class, and posterity is sold to the highest bidder. 

Having disposed of the first two points we 
will pass on to the third, which is a considera- 
tion of a rational system of currency. We will 
first assume that government alone has the 
exclusive right to tax, which assumption has 
been fully proved by the foregoing deduction. 
We will next lay down the principle that scien- 
tific money must represent labor performed, 
and since labor is the real measurer of values, 
any currency system which does not conform 
to this law is a false and vicious system. A 
promise to pay does not represent labor per- 
formed, and therefore is not honest money. 



68 THE IMPENDING CRISIS 

When the government issues its money the 
very act of issuing it makes it money, and the 
language printed upon it should be of such a 
nature as to indicate clearly that it is money, 
not that it is a promise to pay money. To say 
that a promise to pay is money, is contradic- 
tory; for if it is money, why does it say that 
it is a promise to pay money? Clearly, then, 
a promise to pay is false money. Scientific 
money should be a promise to receive and not 
a promise to pay. Money, we may say for a 
practical definition, is a medium of exchange. 
But this does not satisfy — it is only half a 
definition. It does not say which is true and 
which is false money. It is quite true that 
money is a mere medium of exchange, and has 
no more relationship to real wealth than a din- 
ner ticket has to your dinner. But in giving 
a scientific definition of money we must say 
what constitutes a just medium of exchange, 
and to do this we must say that money, in order 
to be a medium of exchange, must be a repre- 
sentative of wealth produced. And since all 
wealth is produced by labor, scientific money 
must be a certificate of labor performed. A 
premise to pay does not represent labor per- 
formed, and by scientific analysis is not honest 
money. The quantitative theory of money 
spoken of by a great many is but half the truth, 
because if we deal with quantity alone and do 



THE TRUE THEORY OF CURRENCY 69 

not say what the quantity shall be, how it shall 
be regulated, and of what it shall be composed, 
namely, the quality, then we have determined 
nothing. If one were to ask what is the limit 
of expenditures for the National Government, 
some one else would probably say, "the needs of 
the Government economically administered." 
But who is to determine the meaning and ex- 
tent of the term 'economically administered?" 
Some may think that half a billion is quite 
sufficient; others may think a billion is neces- 
sary, others two billions. So that these terms 
mean nothing. They are not scientific because 
they do not determine anything. In other 
words, it is not a fixed mathematical quantity. 
We must, however, have a fixed known quan- 
tity, for until then all reasoning is useless and 
monetary science is impossible. 

It may strike the reader as curious to say 
that as yet we have no monetary science. And 
why? Simply because we have had no scien- 
tific terms, no fixed quantity upon which to 
reason, and these are the first requisites for the 
construction of a science. When we say that 
the Government appropriates so many millions 
or billions of dollars we infer that there must 
be at least that much money in circulation with 
which to meet the appropriations. Now 
between levying taxes and collecting taxes 
there is an exact ratio or relationship, which is 



JO THE IMPENDING CRISIS 

that for every dollar of tax levied there should 
be its equivalent in circulation. If there is 
more money than taxes then the excess is spur- 
ious, and if the excess is very great then the 
value of the currency will depreciate propor- 
tionately and the loss must be met by an in- 
crease in rent, an increase in prices of com- 
modities, or a decrease in wages. 

Taxes, we have said, are to government what 
wages are to the individual, and since an in- 
dividual cannot justly expend more than the 
sum total of his wages, then by analogy gov- 
ernment cannot justly appropriate nor expend 
any more than the sum total of its just taxing 
power. Now, since the sum total of the taxes 
and the sum total of currency outstanding with 
which to pay them are at a balance, namely, 
equal, then taxation and finance are inseparably 
related, and are, as it were, the reciprocals of 
each other. 

Let us, therefore, reduce the taxes upon 
products of labor each year five per cent and 
add the equivalent to the tax upon land values 
until it finally equals the annual rental value of 
the land, and let a paper currency be issued by 
the government with full legal-tender qualities 
(not a promise to pay) based upon these taxes, 
and retire all other forms of currency as fast as 
the new currency is issued. This would be 
making ground rent the basis of currency, 



THE TRUE THEORY OF CURRENCY 7 1 

which of all forms of security is the most per- 
manent and most valuable. As population in- 
creased the rent would correspondingly in- 
crease, and in consequence the volume of cur- 
rency would be increased to meet the demands 
of an increased population. The notes would 
be receivable for all debts whatsoever with- 
out any exception, but the volume of cur- 
rency outstanding at all times would be equal 
to the sum total of ground rent for that year, 
a new estimate being made each year. This 
would give us a currency based upon the entire 
land value of the nation ; it would be self-regu- 
lative; it would be free from all interference 
from private sources, and would virtually be 
placing a government bond into the hands of 
every person. But the difference would be 
that instead of a few being creditors and the 
many being debtors, all would be creditors and 
debtors alike. Its security would never fail, 
for that is based on the governmental taxing 
power on the land, and the value of land 
depends upon and bears a mathematical rela- 
tionship to population. We need not bother 
ourselves about gold or silver security, for how 
can the gold and silver locked up in the Treas- 
ury be called money ? Money, we have said, is 
a medium of exchange, and how can the mil- 
lions that are locked in treasury vaults be a 
medium of exchange? They do not perform 



J2 THE IMPENDING CRISIS 

their function as money, and failing to do this 
they cease to be money. The gold and silver 
in the Treasury might as well be in the bottom 
of the sea for all the use that it is in satisfying 
human wants and facilitating exchange. It 
has been readily seen that our present monetary 
system is unjust at the very premise — a gigan- 
tic trick, exploited in the interests of a few — 
and will, if carried to its logical conclusion, 
involve the nation in bankruptcy. 



CHAPTER VII 

WAGES AND PRICE 

Although the terms "wages" and "price" are 
very closely related, and we might say almost 
analogous, we will, for popular convenience 
and clearness, keep them separate. 

In this chapter we will, as nearly as possible, 
restrict ourselves to the use of the terms in their 
relative and practical sense, rather than in their 
absolute and philosophic sense. 

In a healthy condition of society price is de- 
termined in the same manner as values — by a 
free, unrestricted competition; and wages are 
determined in the same way by the competition 
of labor. Now it may be answered that such a 
condition exists to-day. It does to a very lim- 
ited extent ; but to say that competition to-day 
determines wages and price is merely stating 
only about one- fourth of the truth — the other 
three-fourths being summed up in the word 
"monopoly." It is monopoly which deprives 
labor of fully three-fourths of its earnings. 
Monopoly means, in effect, a depressed margin 
of production. Now the margin of production 



74 THE IMPENDING CRISIS 

is that portion of the earth's surface which is 
either in use or under cultivation. Supposing, 
for instance, that we represent the earth, — the 
limit of cultivation — by the Figure i, and the 
portion of it that is either in use or under cul- 
tivation as i-ioo, then the margin of produc- 
tion is i-ioo. The other 99-100 is idle land. 
The proportion will remain constant if the sum 
total of the earth's population does not change, 
but if the population increases to any extent 
then the margin of production falls, because 
there is a larger number among whom the prod- 
uct is to be divided. If land is withheld from 
use (and we include city and suburban land) it 
means idle men, and how can idle men produce 
wealth? The practice of the landlords in all 
ages has been to keep a large part of the popu- 
lation in idleness and thus depress the wages of 
all. The power of the land-owning class thus 
to exact tribute from every producer is respon- 
sible for that strange spectacle that has puzzled 
the wise men in all ages — poverty and hard 
times going hand in hand with material prog- 
ress. 

The great corporations throughout the coun- 
try could not obtain labor at the small price 
they now do were it not for the fact that our 
taxing system prevents the laborer from em- 
ploying himself and compels him to accept the 
terms which the corporations are gracious 



WAGES AND PRICE 75 

enough to offer. This narrowing of the mar- 
gin of production, this limiting of the opportu- 
nities for self -employment, depresses wages to 
a mere living basis, raises rent, and increases 
year by year that portion which the monopolis- 
tic or privileged class now takes from wages 
and appropriates under the name of dividends 
and interest. 

While treating of wages and price we should 
also notice that there is a great deal of popu- 
lar superstition in regard to wages and profits. 

Let it be clearly understood at the outset that 
what is commonly termed "profit" should prop- 
erly be termed "wages," and that as a distinct 
and separate term "profit" does not exist in 
economic science. This term has become so 
common in our business relations that any criti- 
cism of its use may surprise the average reader. 
In science we must discard all terms which can- 
not be given a positive definition. The essen- 
tial requirement of a definition is that it shall 
have limitation, distinctiveness. In Political 
Economy terms having a metaphysical origin 
must be discarded as too vague and indefinite 
a medium for the presentation of scientific 
ideas, and this is especially true when such 
terms are made the corner-stone upon which a 
rational and positive system is to be construct- 
ed. Such a term is "profit." 



?6 THE IMPENDING CRISIS 

What we really mean when we speak of a 
certain occupation being more profitable than 
another is merely that such occupation yields 
larger wages — larger results for the labor in- 
volved. Since nothing can be obtained without 
some labor being performed by somebody, and 
the result of labor is wages, what use is there 
for such a term as profit as something apart 
from wages. In any illustration used it must 
always be borne in mind that the labor must 
be service rendered. Gambling and robbery 
form no part in the economy of nature when 
mankind is considered. In dealings of this 
kind what one man receives for nothing an- 
other man must give for nothing. For exam- 
ple, a man speculating on horse races or on the 
stock exchange may be the richer by a thousand 
dollars at the end of the day. But this is not 
wages, for although some labor may have been 
involved, such labor was in no way connected 
with service. 

If a man goes into the country, picks black- 
berries, brings them into the city and sells them, 
the price received is his wages because it is the 
result of his labor. A merchant in business 
may at the end of a year have five thousand 
dollars more than when he started. But this, 
under normal conditions, is wages and interest. 
Wages, because it is the result of an intelligent 
and efficient management ; and interest, because 



WAGES AND PRICE 77 

it is the result of capital in the process of ex- 
change. No other factor enters into the propo- 
sition. 

So much for profit. 

The numerous magazines teem with arti- 
cles defending our present industrial system. 
They are written mostly by those whom a 
change of system to one based on justice would 
deprive of lucrative employment. The purpose 
of many of the writers seems to be to adminis- 
ter a sort of hypnotic treatment to the working 
classes by inducing them to believe that their 
wages have been increased, their rents lowered, 
and their cost of living diminished — in short, 
that they are enjoying a period of prosperity 
unparalleled in the history of the world. For 
instance, one writer says that "Forty years ago 
the time of human labor to produce one bushel 
of corn was four hours and thirty-four min- 
utes ; now it is forty-one minutes. The cost of 
human labor to produce this bushel has declined 
from thirty-five and three-fourths cents to ten 
and one-half cents. It is one of the marvels of 
the age that to-day the amount of human labor 
required to produce a bushel of wheat from 
beginning to end is, on the average, only ten 
minutes, whereas in 1850, the time was three 
hours. The cost of the human labor required 
to produce this bushel of wheat has declined 
from seventeen and three-fourths cents to three 



78 THE IMPENDING CRISIS 

and one-third cents. Forty years ago, when 
men mowed the grass with scythes, spread it 
and turned it over for drying with pitchforks, 
raked it into windrows with a hand-rake, cock- 
ed it with a pitchfork, and baled it with a hand- 
press, the time of human labor required per ton 
of hay was thirty-five and one-half hours ; now 
with horse-mowers, horse-rakes, and horse- 
presses, the human labor required per ton is 
eleven hours and thirty-five minutes ; the labor 
cost has fallen from three dollars and six cents 
to one dollar and twenty-nine cents per ton." 

Now let us recapitulate a moment for exami- 
nation. If, as the writer states, a certain amount 
of goods can be produced to-day in one-seventh 
of the time required to produce it forty years 
ago, it is self-evient that the power or effec- 
tiveness of a man's labor has been multiplied 
seven times. And it is further evident that if 
he can produce seven times the amount of 
wealth in the same space of time that he did 
forty years ago, his wages should be seven 
times as great as they were then, minus the cost 
and maintenance of machinery. Are they? If 
it costs two-sevenths as much labor to produce 
a bushel of wheat now as it did forty years ago, 
then most of the difference should have gone 
into the fund of wages. Has it? If it requires 
only one-eighteenth the time to produce a 
bushel that it did fifty years ago, then farm 



WAGES AND PRICE 79 

labor is eighteen times as effective as it was 
then. Has the wages of the laborer increased 
in any similar proportion ? Even admitting the 
cost and care of machinery, the phenomenon is 
not explained, because under free and normal 
conditions the cost of maintenance is so small 
compared with the power generated, that 
wages should be multiplied rather than de- 
creased. And then, too, the very cost and care 
of machinery would rather tend to increase 
wages than decrease them, because it furnishes 
an avenue for employment. 

"It is one of the marvels of the age" that sta- 
tisticians can go to great pains in collecting in- 
formation, can pile up figures, and yet, after 
all, overlook the whole pith and marrow of the 
question. Since they call this prosperity, why 
do they not tell where the benefit of this in- 
creased power of production has gone. We 
know by the present condition of the farm la- 
borer that he does not receive it. The question 
then is, "Where does it go ?" and the answer is, 
"To the rent-roll of the landlord.'' 

All the great inventions and improvements 
of the past century have lessened but little the 
burden of the laborer, and, on the other hand, 
the disparity between his condition and that of 
the land monopolist is much more marked. If 
one would see where the profits of farming go, 
let him study the dividends on watered stock 



80 THE IMPENDING CRISIS 

of our transportation systems — the embodi- 
ments all of special privilege. The writer of 
the article, in speaking of the results of ma- 
chinery, further says : "Now we know why so 
many men can be spared to go from the farm 
to the factory without interfering with na- 
tional prosperity; here we discover how it is 
that the cities of America can muliply by ten 
in the same half century that the farming com- 
munity is multiplying by two, and that without 
any false proportions or insecure foundations 
for the great industrial structure to stand 
upon." 

In the first place it is the grossest error to sup- 
pose that men migrate to the cities because they 
can be spared from the farms. The actual rea- 
son for their migration is that by our system of 
taxation and land speculation a large and in- 
creasing percentage of our farms have become 
mortgaged or else the occupiers have become 
mere tenants. The farmer must also sell at a 
natural price and buy at an average tariff rate 
of sixty per cent, so that in every transaction 
he is sixty per cent the loser. These processes, 
involving the subtraction of rent from the 
farmer's yearly production, have crippled him 
to such an extent that he cannot afford to pay 
the wages which an increased power of produc- 
tion, resulting from the great inventions of the 
age, would give him under a natural and just 



WAGES AND PRICE 8 1 

system of taxation. Men naturally go where 
they can get the best wages and the most com- 
forts and happiness out of life. Now if the low 
wages and unwholesome conditions of the 
crowded factory and city are an improvement 
upon farm life, then the condition of the farm 
laborer must certainly be a deplorable one. The 
reason why the cities of America have multi- 
plied by ten in the same time that farming com- 
munities have multiplied by two is, because land 
speculation (the withholding of land from use) 
and unjust taxation have forced men to look 
for employment elsewhere. Thus the cities have 
had a forced and unnatural growth while farm- 
ing districts have remained almost in an unde- 
veloped state. Men failing to find employment 
for which they are suited in the crowded cities 
attempt to live by their wits. All sorts of 
methods are resorted to, and the result is the 
criminal and the tramp. Society then tries to 
protect itself against itself (for these are a part 
of society), with the inevitable result of further 
complications of social disorder. 

One of our leading metropolitan newspapers 
quotes Mr. Henry C. Payne, then vice-chairman 
of the Republican National Committee, as say- 
ing, on his return from Europe in 1901, that 
"In Austria I asked a man why Americans, 
paying higher wages, could send their goods to 
Europe and undersell the Europeans on the 



82 THE IMPENDING CRISIS 

products made in their own lands." The ques- 
tion was prompted by seeing a shoe store in 
Vienna where they sold only American-made 
shoes. "In answer, he said that when in the oil 
business he sent men to see how they produced 
oil in the States, and found that five men in 
America could, with improved machinery, ac- 
complish what thirty did in Europe. That, he 
thought, was the secret." 

The point, and it is the vital point, although 
the average reader will probably overlook it, is 
that if one man in America can produce as 
much as six men in Europe, then that man's 
wages should, on the average, be six times as 
much, but the actual fact is that the wages of 
the American laborer are relatively less than 
those of the European, for if he performs six 
times the amount of labor and receives four 
times as much pay, then it is clear that he re- 
ceives only two-thirds as much for his day's 
work as his European friend. 

Numerous causes combine to produce this in- 
defensible condition, the most important of 
which is the fact that monopoly in some form 
or other takes the result of nearly all the im- 
provements, leaving the laborer no better off 
than before. Monopoly, whatever its form, 
must somewhere have a resting place upon the 
earth's surface, and here it is the duty of gov- 
ernment to require it to pay the full value of 



WAGES AND PRICE 83 

the special privilege it enjoys. Franchises are 
special privileges. 

Now let us devote a few minutes to the fam- 
ily market and get an illustration of this great 
and unparalleled "prosperity" which has been 
flooding the land for the last seven years. The 
prices of the common articles of food have in- 
creased 25, 50, and in some cases ioo per cent 
over the prices of several years ago. Peas 
which were 75 cents per bushel in August, 1900, 
are this year $3.00. String beans have increas- 
ed in price 50 per cent; cabbage per hundred 
have increased 100 per cent ; carrots 33 per cent ; 
tomatoes 20 per cent ; apples per barrel 50 per 
cent ; oranges per box 80 per cent ; bananas per 
bunch showed an increase in price in 1901 of 
three hundred and sixteen per cent, despite the 
fact that we now own a large portion of the 
West India Islands. The price of potatoes 
has doubled in the past three years.* 

It would be a very dismal and gloomy pic- 
ture indeed were we to imagine that this "pros- 
perity" were always to be the lot of the poor. 
Indeed, if present tendencies continue, "pros- 
perity" may develop into a famine. Almost 
everyone is working fully as hard and for as 
long hours as he ever worked before "pros- 
perity" came, but very few are able to save any 

*These are the figures showing increase in price 
from the summer of 1900 to the summer of 1901. 



84 THE IMPENDING CRISIS 

of their earnings, because of the great increase 
in the cost of living. The increase in the cost 
of clothing and building material is much the 
same as the increase in the cost of food. Pas- 
senger and freight rates have not decreased in 
the least. 

Certain newspapers attempt to explain this 
increase in the cost of living by attributing it 
to purely local causes. But they do not take 
into account those great general causes which 
are constantly at work in the production and 
distribution of wealth, and which govern the 
condition of the nation at large. If the price of 
labor remains the same, but the cost of living 
increases, by what process of reasoning can one 
make "prosperity" out of it? In order to im- 
prove the condition of the people the increase in 
wages must be greater than the increase in cost 
of commodities, so that there be a balance over 
and above the cost of living. Has this change 
taken place ? 

The millions of gold now lying in the Na- 
tional Treasury, and which are so often spoken 
of as being indubitable evidence of prosperity, 
merely represent the extent to which labor has 
been plundered by the enactment of internal 
revenue and tariff laws. It is not the foreigner, 
but the American workman, who has paid every 
dollar of this immense sum ; and yet politicians 
are wont to boast of it as being evidence of 



WAGES AND PRICE 85 

national prosperity. The boom in stocks, the 
opportunities for employment in the military 
service, the stimulation given to certain lines 
of industry by the Spanish-American war are 
all pointed to as evidences of prosperity. How 
absurd is the inference of politicians that specu- 
lation, warfare, and unjust taxation can gener- 
ate prosperity. If prosperity is everywhere, 
why cannot one pick up the daily paper without 
seeing notices of mills closing down, and men 
quitting work by the thousands, demanding 
more pay and shorter hours ? Would not con- 
tentment, generally speaking, be the natural re- 
sult of a healthy prosperity? Again, if we are 
enjoying such great prosperity, why did Con- 
gress maintain an Industrial Commission ? The 
very creation of this commission gives the lie to 
the statement that all is well, and is an admission 
on the part of legislators that alarming symp- 
toms of social disease have for some time been 
developing. We do not contend that there has 
been no greater production of wealth than here- 
tofore, but we do contend that this industrial 
activity is but temporary, and further that 
those who created the wealth have not received 
the benefit of it. The bulk of prosperity is all 
going one way — into the hands of the privi- 
leged and landed classes, and has put the politi- 
cal parties of the nation more and more under 
their domination and control. The concentra- 



86 THE IMPENDING CRISIS 

tion of wealth into the hands of a few can never 
be a healthful sign in the history of any nation. 
The only possible way in which the wages of 
the vast army of workers can be permanently 
increased and a general circulation of wealth 
maintained is by raising the margin of produc- 
tion. Now the only way to raise the margin of 
production is to remove all taxes on labor, or 
the products of labor, and to substitute in place 
thereof a uniform tax based upon the annual 
rental value of the land, exempting all im- 
provements. 



CHAPTER VIII 

THE THEORY OF INTEREST 

The question of interest is one which has 
puzzled the mind of every thinker in political 
and economic science, from the time of Adam 
Smith to the present day. A great deal has 
been written on the subject, but as yet no scien- 
tific definition has been formulated, nor has^ its 
nature and place in the science of political 
economy been satisfactorily explained. There 
has been no end of writers, mostly socialistic 
enthusiasts, who have been eager to state that 
interest is robbery, but whose writings in no in- 
stance have proved or justified their statement. 
The reason, however, for such an assumption 
on their part I take to be that they have con- 
fused interest with usury. The system which 
they have attempted to construct is wholly em- 
pirical in its nature and does not accord with our 
fundamental ideas of justice, nor can its fair- 
ness be demonstrated by abstract reasoning. The 
fallacy of these writers consists first in assum- 
ing that usury and interest are one and the 
same thing; second, that because social condi- 



88 THE IMPENDING CRISIS 

tions are largely unjust, interest, which is as- 
sociated with these conditions, must be unjust 
also. Now truth may be, and in many cases is, 
associated with error, but that does not say that 
truth is error. It is a common fact of experience 
that so great is the adhesive power of truth 
that a little can hold together a great amount 
of error. Because our present conditions are 
unjust it does not follow that interest is unjust. 

Let us for a moment examine into the nature 
of the terms or ideas and their association which 
underlie political economy. Land, labor, capi- 
tal, are the terms of causality (causal). Wages, 
rent, and interest are the terms resultant. Labor 
upon land produces wealth; population (num- 
bers) upon land produces rent. Wealth in ex- 
change produces interest. These terms or ideas 
form the basis for the entire subject of political 
economy, and any question affecting the pro- 
duction and distribution of wealth can be re- 
solved into one of these terms. 

What Ricardo and George have done for 
wages and rent yet remains to be done for in- 
terest. The ground which I have chosen to 
defend in opposition to the socialistic theory is, 
that in a just order of society usury will not 
exist, but interest will always exist ; and further 
that it has a necessary and definite place in the 
social organization. We must first understand 
what we mean by usury and what by interest, 
for between the two there is a vast difference. 



THE THEORY OF INTEREST 89 

Usury is the price or extent to which one 
man can appropriate another man's labor by rea- 
son of the margin of production being constant- 
ly pressed down; and employment in conse- 
quence being made scarce, the second man is 
of necessity forced to borrow from the first. 
The generator of usury is injustice ; therefore, 
to abolish injustice is to abolish usury. Some 
will say that the same will hold good in regard 
to interest. Let us see. 

Interest has been defined as the price for the 
use of capital. But since this is a very broad 
generalization and does not show the origin and 
nature of interest a more specific statement is 
necessary. Interest is the cost of transfer or 
price for delivering a present product for a fu- 
ture promised product. The whole element in- 
volved is time. Interest is to time what freight 
is to distance, and, to capital what wages is to 
labor. Capital of itself can create no increment. 
It is only as an instrument in the hands of labor 
that it has a value. Capital, then, is wealth in 
exchange, and since interest is the natural off- 
spring of capital, then interest arises wholly in 
exchange and not in the production of raw ma- 
terial. 

When we admit that it is just for labor to 
receive wages we must of necessity admit that 
it is just for capital to receive interest, for since 
capital is wealth in exchange and wealth is the 



90 THE IMPENDING CRISIS 

result of labor, then borrowed wealth is bor- 
rowed labor. Therefore, when we borrow 
wealth we hire labor, and the price or interest 
upon it is determined by the supply of available 
capital and the demand for the same. It has 
been established by modern writers in socio- 
logical science that land, labor, and capital are 
the three great factors in all production. Now 
if each one is an essential factor or antecedent, 
then each one must have an essential and sep- 
arate consequent, otherwise the economic equa- 
tion would be out of balance. 

The primary or major factor in (all) pro- 
duction is labor, but since exchange is part and 
parcel of production, then interest which arises 
wholly in exchange must be a natural and le- 
gitimate result of production. Interest could 
not exist with a Robinson Crusoe on an island, 
for the entire result of his labor would be 
wages. But if a number of people came to live 
upon the island, capital would soon be created, 
exchanges would begin, and immediately inter- 
est would arise. The price or cost of transfer- 
ring the future into the present is regulated by 
the law of supply and demand, namely, the 
value to the borrower of a future product made 
use of to-day. 

The contention that interest is high where 
wages are high and low where wages are low, 
will not stand the test of reason. It is easily 



THE THEORY OF INTEREST 91 

possible for interest to be high where wages 
are high, and low where wages are low, and 
generally this is the case, but to state it as a gen- 
eral proposition will not do, for interest may be 
high where wages are low and low where 
wages are high. For instance, in a new country 
wages will be high because the chances for self- 
employment are more numerous and the laborer 
will retain all or nearly all of his product. In- 
terest, on the contrary, may be low because the 
free conditions for self-employment may occa- 
sion a diminution in the demand for capital. 

In order for interest to be very high the de- 
mand for capital must be great and the supply 
of available capital must be correspondingly 
small. The two causes must operate simulta- 
neously in order to produce the phenomenon 
of high interest. 

In new countries again there is generally a 
great demand for an exchangeable medium, but 
an exchangeable medium is not capital. In cer- 
tain localities of new countries interest may be 
high, because there is a demand for and a scar- 
city of capital for the development of certain 
enterprises. In course of time, however, interest 
will fall, because by the increase in land values 
and by the withholding of land from use, capi- 
tal is driven out and the benefit which the capi- 
talist could confer upon the country is prevent- 
ed by the land owner (monopolist). The capital 



92 THE IMPENDING CRISIS 

which does not remain employed is robbed of its 
earning power because it cannot be employed 
except by permission of the landlord. The 
reason why the rate of interest is high in the 
present state of society is because of the poor 
distribution of wealth. Wealth being concen- 
trated into the hands of a few makes a condi- 
tion of few lenders and many borrowers ; and 
as the chances for self-employment (margin of 
production) are steadily diminished, then by 
the very law of supply and demand interest will 
continue to rise higher and higher along with 
rent. In fact, it will assume the form of usury. 
Some may say that the rate of interest to-day 
is low, but when we take into account the bil- 
lions of false capital and fictitious stock the rate 
of interest is very high. For instance, a rail- 
road corporation may be capitalized at twenty 
millions of dollars and pay a fair rate of inter- 
est, say six or eight per cent on that amount of 
capital. But when the stock is watered twenty 
millions and the rate of dividend paid remains 
nominally the same, the rate of interest has 
been actually doubled, because eight per cent on 
forty millions of capital which is half water is 
really sixteen per cent on the actual capital em- 
ployed. In an oil company of which the writer, 
has knowledge the amount of cash paid in by 
its stockholders is only one-tenth of the capital 
as represented on paper. If the company pays 



THE THEORY OF INTEREST 93 

a dividend of five per cent on the five hundred 
thousand capital it will in fact be paying fifty 
per cent on the amount of money actually in- 
vested. It is in this way that the corporations 
all over this country pretend to defend them- 
selves in attempting to conceal the truth and by 
saying that the rate of dividend paid by them 
is small. The fact is, that if we were to squeeze 
out the water and compel every corporation to 
stand upon a dollar for dollar basis, we would 
find the rate of interest to be very high. 

Monopoly and special privilege are the most 
powerful factors (agents) in the production of 
exorbitant interest and low wages. It is per- 
fectly right and proper for a tenant to pay in- 
terest for the use of a house which is not his 
own, and this would be sufficient. But our 
laws do not stop here. They further allow the 
owner of the house to collect ground rent which 
he did not create, and by so doing the right of 
property is violated. A tenant speaks of pay- 
ing so much rent, when, as a matter of fact, he 
pays both rent and interest — rent for the occu- 
pancy of the land and interest for the occu- 
pancy of the house, which is capital. Capital 
is essentially private property, and as such its 
owners are entitled to the interest which ac- 
crues from its use. Rent, on the contrary, is 
associated entirely with land. It is a public 
creation, and as such should be taken for the 



94 THE IMPENDING CRISIS 

benefit of all. When land owners are permit- 
ted to appropriate rent as though it were pri- 
vate property, the general fund of production is 
diminished just that much, wages decline, labor 
is robbed of its just share of production and 
loses its efficiency. Capital lies dormant and 
becomes unproductive; in fact, the whole ma- 
chinery of industry is thrown out of gear. In 
most corporations the interest paid to stock- 
holders and bondholders is far in excess of the 
total of wages paid to the employees. The rea- 
son for this is that the corporation takes advan- 
tage of an artificially overstocked labor mar- 
ket, forces its employees to work for bare liv- 
ing wages, and appropriates for the stockhold- 
ers the difference between what they do actually 
pay their employees and what they would have 
to pay them under just conditions. 

We will state the same fact in another way 
by saying that the enormous dividends paid by 
corporations to stockholders are not properly 
the earnings of capital. On the contrary, they 
are almost entirely the result of labor, and as 
such labor should receive them in wages. But 
by the corporation having the power to force 
one man to do two men's work it can appro- 
priate the earnings of one man and pay it to 
capital as interest. By making one man do two 
men's work they are enabled in each and every 
similar case to appropriate the earnings of one 



THE THEORY OF INTEREST 95 

man. It is a case of the wages of the employees 
being paid to capital under the assumed name 
of interest. 

This is the evil of special privilege, and the 
whole process is maintained through ignorance 
and bad laws. Under free conditions the pro- 
ductive factors would adjust themselves auto- 
matically, for then a man would not be com- 
pelled to sell his labor for less than it was 
worth. Under free conditions the productive 
factors would each receive their just return, 
but under conditions of to-day rent robs inter- 
est, interest robs wages, and the landlord robs 
both. 



CHAPTER IX 

THE RIGHTS OF MAN 

The collective natural rights of society may 
be likened to a mathematical quantity. If we 
give privileges to some which we deny to others 
we at the same time diminish proportionately 
the rights of the others. There is nothing so 
incongruous in politics as a kingly republic, for 
kingship and democracy cannot co-exist any 
more than light and darkness. The forms and 
methods of government that were popular and 
efficient three hundred years ago will not and 
cannot satisfy us to-day. As man changes, so 
must his political organization change with him. 
As the brute in him becomes tamed and his 
higher qualities developed, so must government 
by force give place to government by intelli- 
gence and morality. If it be true that a few are 
born to govern, if it be true that one man's 
rights are or can be greater than those of an- 
other, then how much greater are they? By 
what standard can we determine? The great 
warfare that is gonig on to-day is the clash of 
modern ideas with the medeival ideas of kingly 



THE RIGHTS OF MAN 97 

and arbitrary power. There can be no question 
of the final victory of science over superstition, 
of truth over error, of democracy over aristoc- 
racy — but yet how slow the dragon of tyranny 
is in dying. The progress which scientific ideas 
have made during the last fifty years is disclos- 
ing the superstition of all forms of government 
based upon tradition and privilege. The spec- 
tacle presented in Europe to-day is but the clos- 
ing of an epoch in that great historical drama, 
where royalty and privilege have unceasingly 
assailed the rights of mankind. The millions 
of English subjects groaning under the debt of 
several billions, the result of unnecessary and 
unjust wars ; the plodding subject of the Fath- 
erland overburdened with the support of an 
aristocracy, and of a military organization large 
enough for the whole of Europe; the peasants 
of Spain and Russia browbeaten and ground to 
the earth by a cruel and rapacious aristocracy. 

In our own country the trust magnate, the 
railway king and the great manipulator of 
finance working through the party boss are as 
absolute in power as almost any monarch in 
Europe. Half a dozen men can at any time, if 
they choose to do so, stop the wheels of indus- 
try and so cause a panic. 

One might say that the people control the 
railroads of the United States. As a matter 
of fact a commission, known as the Inter-State 



98 THE IMPENDING CRISIS 

Commerce Commission, was created sixteen 
years ago, when it was feared that the railroads 
were becoming stronger than the government, 
to compel uniformity of freight rates and to 
prevent pooling. The courts, however, have so 
limited the powers of this Commission, and its 
members, with a few exceptions, have been so 
cowardly, that the Inter- State Commerce Com- 
mission has come to be a synonym for im- 
potency. In Congress the hired advocates of 
injustice are ever ready to barter their con- 
science and the people's rights in order to 
secure the patronage of some rich and powerful 
monopoly. It is this betrayal of trust, this 
cringing hypocrisy which gives to politics 
the stench of corruption and decay. How can 
politics be pure when those who should be the 
representatives of the people are actually the 
agents of their oppressors — the railroads, the 
corporations, and the trusts ? 

When a representative of the people has the 
courage to rise in a legislature to speak against 
some pernicious railroad or other corporation 
bill, he is invariably a marked man, and is al- 
most sure of defeat at the next election. These 
conditions must certainly have causes or their 
existence would be an impossibility, and they 
themselves in turn becoming causes will in the 
near future produce effects anything but whole- 
some to the welfare of our republic, for it is 



THE RIGHTS OF MAN 99 

through ignorance and failure to assign proper 
causes for social phenomena that so many ad- 
vocate and occasionally resort to measures of 
lawlessness and revenge. And then again the 
very conditions in which many are forced to 
live engender and stimulate in them the belief 
that all government is wrong. 

Justice is the beginning and the end of all so- 
cial order and improvement. Without this as a 
primary conception, no system of government 
can have a permanent existence. Various sys- 
tems of a disciplinary nature have been estab- 
lished among men, but of no system which his- 
tory discloses can it be said that it was estab- 
lished upon that eternal and fundamental prin- 
ciple. Expediency and empiricism have alter- 
nately dominated man's reason and belief, and 
even these have too frequently given way to 
class legislation, martial despotism, and relig- 
ious bigotry. 

The anarchistic movement of to-day is the 
natural reaction against the European system 
of too much government, and the American 
people are made to feel this reaction because 
they have allowed the politics of Europe to in- 
fluence the politics of America entirely too 
much. Where it is superstitiously believed that 
the business of government is to inquire into a 
man's personal and family affairs, to order his 
coming and going, to regulate values arbitra- 



"L.ofC. 



IOO THE IMPENDING CRISIS 

rily and to do ten thousand other absurd things, 
the idea of individual liberty is lost, and it is 
natural to expect sooner or later a reactionary 
movement to set in and go to the other ex- 
treme. Many of us do not seem to be aware 
of the fact that man is largely what his gov- 
ernment makes him. Every civilized country 
to-day has among its citizens a certain number 
of anarchists. Every effort is made to obliter- 
ate them, but their numbers increase. Quite a 
number of them are in our own country. What 
is the reason for their existence and increase, 
and why can they not be successfully suppress- 
ed? When men make false oaths to the asses- 
sor and thus cheat the city out of its revenue, do 
they not show contempt for government? 
When the well-dressed lobbyist secretly and 
openly bribes legislators and seeks to subvert 
public justice to the service of mammon, is he 
not undermining faith in government? When 
a coterie of men can by political intrigue and 
wire-pulling rob a city or nation of franchises 
worth millions of dollars, do they not contrib- 
ute to the general corruption ? When the stock 
gambler and lobbyist can go to church on Sun- 
day, kneel on velvet cushions, and listen to ser- 
mons with all criticism of their methods care- 
fully excluded, is not this a condition of social 
and religious anarchy? And then the trust 
king, who can steal the wages of his employees 



THE RIGHTS OF MAN IOI 

and devote a small portion to endow churches 
and universities in order that his name may be 
handed down to posterity as a philanthropist, 
is not he much more a menace to government 
than an insignificant number of men of unbal- 
anced minds? Truly our social system makes 
but a travesty of justice. 

What chance in the world of business has the 
young man of to-day but to become the em- 
ployee of some large corporation and thus make 
a first-class machine of himself? He is expect- 
ed to study the interests, not of himself, but of 
his employer, which also, only too often, are 
opposed to the interests of the community. The 
day is passed when the country boy can come 
as of old into a large city and by honest indus- 
try amass a competency. The opportunities 
that may still exist are becoming scarcer and 
scarcer each year. As opportunities for self- 
employment have become fewer and fewer in 
number we have seen the tramp become a rec- 
ognized member of the body politic, crime has 
increased, necessitating in all our large cities a 
great police force and courts and jails maintain- 
ed at an enormous expense. 

We might truthfully say that each genera- 
tion has its own difficulties to solve. The prob- 
lem of the passing generation was the abolition 
of chattel slaverv. The problem of the genera- 
tion now living is the abolition of industrial 



102 THE IMPENDING CRISIS 

slavery. There are but two ways in which a 
man can get a living in this world — either he 
must work for it himself or someone else must 
work for it for him. Even if a person should 
inherit wealth he is not exempt from this gen- 
eral statement, because the natural forces of 
decay, which are ever active in the world, must 
be overcome by an equivalent force of repro- 
duction, and that reproductive force is human 
labor. Eliminating the very small percentage of 
persons incapable of productive labor, it is evi- 
dent if a man does not work, yet receives a liv- 
ing, that the law gives him the power to appro- 
priate the labor of others without rendering an 
equivalent. The essence of slavery is, that one 
man does the work and another receives the 
product. Slavery can exist without laws per- 
mitting the purchase and sale of human beings. 
The slavery of to-day is only more subtle and 
indirect. It is quite as actual and felt even 
more keenly. The slavery of to-day, and, in 
fact, of all times, has proceeded from that fun- 
damental evil — private property in land. 

Superficial thinkers have a great deal to say 
on the sacred rights of property, and what 
should be taxed and what should not be taxed. 
They utterly fail to see that to tax private prop- 
erty is to deny the right to private property ; yet 
it is upon this false and vicious principle of de- 
nial that our whole economy of government is 



THE RIGHTS OF MAN IO3 

based. From the insane utterances of those 
who boast of the sacred rights of property one 
would suppose that property has rights but men 
have not. A municipality puts a tax upon dogs 
when they become too numerous and when the 
desire is to diminish their number. We do not 
say that a tax is put upon capital for the same 
purpose, but we cannot deny a similar effect, 
namely, a decrease in the production of wealth 
and a depression in wages. In affirming the 
rights of man and the rights of property, it can- 
not be too often repeated that rent is not an in- 
dividual creation. It is essentially a public crea- 
tion, and as such should be taken by the public 
for the benefit of all. In the protective tariff 
theory we have one prominent instance how 
human rights are denied and wages in conse- 
quence depressed. We know that freedom of 
exchange increases wages. From this we must 
logically infer that restriction of exchange de- 
creases wages. We challenge any one, however 
great his abilities, to disprove the proposition ; 
and if the proposition be true, then how can 
men fix their faith in a protective tariff? It is 
but a species of the black art in government: 
the greatest deception in all political organi- 
zation, save perhaps that monstrous blasphemy 
— the Divine right of kings. 

Liberty and privilege are an anomaly in all 
government. Either one is hostile to the other. 



104 THE IMPENDING CRISIS 

Liberty enlightens mankind, privilege en- 
shrouds him in superstition. Liberty is the 
source of good government, privilege is its de- 
struction. Liberty awakens in mankind those 
aspirations for a higher and nobler state, privi- 
lege robs him of his morals and makes him a 
slave to his baser nature. 

Landlords, bankers, and self-seeking politi- 
cians — these are the influences of organized 
privilege that bribe our legislators, that corrupt 
our politics, break our laws, subvert our rights, 
and make society a prey to their selfish ambi- 
tions. Why should it be difficult for bankers 
to declare large dividends when their very debts 
are made capital for them ? Why should it be 
difficult for the lawyer class to become wealthy 
when it makes itself the mouthpiece of vested 
wrong and strives to perpetuate its existence by 
framing laws in direct opposition to the self- 
evident facts of human nature? Why should 
not the landlord and trust magnate revel in 
luxury when rent and special privilege are their 
private property ? 

Such is the condition of society under the 
cruel domination of heartless aristocracies and 
soulless corporations; of a society whose lead- 
ers declare that a few are born to govern and 
the many to be governed. We cannot forever 
apply the balm of empty charity to the wounds 
of poverty and wrong and imagine that we 



THE RIGHTS OF MAN IO5 

have done justly. We cannot forever escape 
the consequences of our wrong, nor should we 
hope to do so. Let us press forward in the 
conflict of human right with vested wrong, of 
reason with superstition; and though the vic- 
tory may be deferred for a while, yet in the end 
must we surely win. 



CHAPTER X 

ALIEN LANDLORDISM AND ITS REMEDY 

The following articles, taken from represen- 
tative metropolitan journals, will give an idea 
of the way in which the American people are 
laid under perpetual tribute to foreign land- 
lords. In the Chicago Times of February i, 
1895, the following appeared: 

"That English aristocrats should own large 
domains in the United States and rule them 
from London is at first a difficult thing to 
grasp. Not until it is borne in mind that peers 
and peeresses of Great Britain are large landed 
proprietors in our country (Viscount Scully 
alone owns three million acres in Illinois, Iowa 
and Nebraska), does the significance of absen- 
teeism in landlords become apparent. But 
now the matter will be brought home to Ameri- 
cans more directly than it has ever been 
brought home yet, for there is shortly to be a 
union in London of the American land-owning 
interests, and a series of drastic measures are 
scheduled, which it is believed will not only 
increase the annual rentals of the vast domain 



ALIEN LANDLORDISM AND ITS REMEDY 107 

involved, but which will greatly affect the den- 
sity of the hundreds of thousands who dwell 
upon it. 

"First of all, a list of the members of the 
aristocracy who own the lands in question will 
not be without interest. Such a list has never 
before been given in full. The greatest of the 
English holdings and the persons interested 
are these: 

"The Texas Land Union {Syndicate No. 3,) 
3,000,000 acres. — Interested peers : Baroness 
Burdette-Coutts, Earl Cadogan, H. C. Fitz- 
roy-Somerset (this is the Duke of Beau- 
fort), William Alexander Lochiel, Stephen- 
son Douglas-Hamilton, Duke of Beaudon, 
the Duke of Rutland, Ughtead J. Kay-Shut- 
tleworth, Eand Ethel Cadogan (maid in 
waiting to the Queen). This syndicate owns 
whole counties in Texas, and tens of thou- 
sands of persons pay it rentals. 
"Sir Edward Reid, 2,000,000 acres. — This is a 
syndicate which owns lands in Florida only. 
It includes the present Duchess of Marlbor- 
ough, Lady Randolph Churchill and Lady 
Lister-Kaye. 
"Viscount Scully, 3,000,000 acres. — His lord- 
ship maintains an elaborate system of bail- 
iffs. 
"Syndicate No. 4, 1,800,000 acres. — This syn- 
dicate has all its holdings in Mississippi. It 
includes the Marquis of Dalhousie, George 



108 THE IMPENDING CRISIS 

Henry Howard Cholmondeley (Viscount 
Cholmondeley), Georgiana, Viscountess 
Cross, the Hon. Lady Hamilton Gordon, and 
the Hon. Lady Biddulph. 

"Marquis of Tweedale, 750,000 acres. — The 
Marquis is William Montagu Hay, famed 
all over Scotland as the rack-rent lord. 

"Phillips, Marshall & Co., London, 1,300,000 
acres. — This firm has the whole peerage for 
its clients. 

"The Anglo-American Syndicate, London, 
650,000 acres. — The funds of widowed peer- 
esses are largely invested here. The lands 
are in the South and West. 

"Bryan H. Evans, 700,000 acres. — Mr. Evans 
resides in London. His lands are in Mis- 
sissippi. 

"The Duke of Sutherland, 125,000 acres. — 
This is the actress-loving, champagne-bibbing 
and rack-rent nobleman of police court fame. 

"William Whalley, 310,000 acres. — Mr. Whal- 
ley is the squire of Peterboro, England. 

"The Missouri Land Company, 300,000 acres. — 
This operates a Missouri domain and has 
headquarters at Edinburgh. 

"Robert Tennant, 230,000 acres. — This is all 
farming land. Mr. Tennant lives in London. 

"Dundee Land Company, 247,000 acres. 

"Lord Dunmore, 120,000 acres. 

"Benjamin New gas, Liverpool, 100,000 acres. 



ALIEN LANDLORDISM AND ITS REMEDY IO9 

"Lord Houghton, 60,000 acres in Florida. 
"Lord Dunraven, 60,000 acres in Colorado. 
"English Land Company, 50,000 acres in Cali- 
fornia. 
"Alexander Grant, London, 35,000 acres in 

Kansas. 
"Syndicate No. 6, 110,000 acres. — This syndi- 
cate includes the Earl of Verulam and the 
Earl of Lankeville. The land is in Wis- 
consin. 
"M. Elfenhauser, of Halifax, 600,000 acres. — 

The land is in West Virginia. 
"Syndicate No. 1, 50,000 acres. — This is a 
Scotch concern, and its land is in Florida. 

"Tzventy-seven million acres, the total. 
"It is claimed that fully 20,000,000 acres of 
American land are thus owned by great land- 
lords in England and Scotland. This does not 
include the Holland Syndicate, which owns 
5,000,000 acres of grazing land in Western 
States, nor the German Syndicate, owning 
2,000,000 acres in various States. 

"It is well known to those who have casually 
looked into the matter that foreign land-own- 
ing has much impeded the development of the 
Western commonwealths. These great land 
owners positively refuse to sell. They prefer 
to establish a system of agencies and bailiffs, 
with the result that serious complications have 
resulted. The State legislatures have done 



110 THE IMPENDING CRISIS 

their best to deal with the question, but hereto- 
fore with only indifferent success. Viscount 
Scully is, rightly or wrongly, made the scape- 
goat of this whole business. He has for years 
been a thorn in the path of one State adminis- 
tration after another, and his shrewdness in 
evading every provision of law directed against 
him has extorted the admiration of thousands. 
Thus Scully practically owns, in Illinois, the 
best part of the counties of Logan, Livingston 
and Tazewell. The State in 1887 passed an 
alien land law, directed solely against Scully. 
To evade it he insisted beforehand upon a 
clause in all his leases stipulating that the lessee 
should pay all taxes accruing against the prop- 
erty leased. The result was the creation of a 
large and solid body of voters in the 'Scully 
Counties,' as they are called, opposed to propo- 
sitions of public improvement by taxation." 

The Pittsburgh Post of October 26, 1896, 
contains the following: 

"As announced in the Pittsburgh Post last 
fall there is consternation among the leasehold- 
ers of the Schenley estate in Allegheny, Pa. 
Quit notices have been served to tenants pro- 
viding that there must be improvement on the 
property or there will be no renewal of leases. 
As the leases expire April 1, this year, 1897, 
and the notices affect over four thousand lease- 
holders, the announcement of the Schenley 



ALIEN LANDLORDISM AND ITS REMEDY III 

estate agent has caused a big-sized sensation. 
The notices affect several thousand merchants 
and business men of all descriptions. 

"The Schenley estate in Allegheny embraces 
about 150 acres, some of it being the most valu- 
able business property on the north side, east of 
Federal Street. 

"The agent for the Schenley estate in Pitts- 
burgh, when seen in regard to the matter, said 
that Mrs. Schenley was carrying out her well 
known policy in regard to her tenants. That 
was that they must erect buildings in keeping 
with the neighborhood. Mrs. Schenley always 
exacted that buildings be put up that would be 
a credit to Pittsburg and Allegheny, and for 
this the two towns should feel grateful. If the 
tenant will not guarantee to erect substantial 
buildings there will be no renewal. Most of 
the leases in Allegheny are twenty-year leases, 
dating April 1, 1877. A few fifty-year leases, 
dating April 1, 1847. At the time these leases 
were drawn the city was very different from 
what it is to-day. Parts that are now modern 
business centers were then cornfields and 
meadows. The localities demand newer and 
more modern buildings. Alleghenians will 
thus see before long the obliteration of many 
familiar but ramshackle affairs that now pass 
for houses or stores, and in their places will be 
more modern buildings. 



112 THE IMPENDING CRISIS 

"The rentals will also be increased. It is 
said that all the leases from April i on will be 
for twenty years and will contain a proviso that 
if the leaseholders erect suitable buildings on 
them within a certain time they will have the 
privilege of renewing their leases in 191 7." 

A writer thus comments on the foregoing in 
one of our magazines :* 

"The Schenley estate is a good illustration 
of the process by which the American people 
are laid under contribution to foreign land- 
lords. Mrs. Schenley was born in Allegheny 
county, Pa., in 1824, the youngest of four chil- 
dren of John O'Hara, who had a six hundred 
acre farm where Allegheny City now stands. 
In 1840, at sixteen years of age, she married 
Captain Schenley, of the British Army, and 
took up her residence in England. Then, in 
1840, Pittsburg, Pa., was a city of 30,000 in- 
habitants and the United States had 17,000,000 
souls. A few years after, on reaching her 
majority, Mrs. Schenley got control of one- 
fourth of her father's 600-acre farm in Alle- 
gheny, which was growing into a city by the 
overflow of population from Pittsburg across 
the river. Captain Schenley leased the land, 
in demand for building lots, on ground rent to 
persons who put up houses at their own ex- 

*"Why?" Magazine published monthly by Frank 
Vierth, Cedar Rapids, Iowa, Sept. 1898, number. 



ALIEN LANDLORDISM AND ITS REMEDY 113 

pense and were fined by a yearly tax on them. 
Every fifteen or twenty years Schenley raised 
the ground rent, which, of course, the tenants 
had to pay ? Who made the ground rent rise ? 
Clearly the people of Pennsylvania, Ohio and 
West Virginia round about by their industry 
and increase in numbers. What did Schenley 
do toward it ? Nothing. But yet he recei > ed 
the benefit in increased rents. The most super- 
ficial mind understands that lots are in greater 
demand in a populous city than in a village, 
exactly in proportion to the population; and 
that the owner of the ground may be thousands 
of miles away without affecting the result. 

"From 1840 to 1900 Pittsburg has grown 
to a city of 321,000 inhabitants; Allegheny to 
a city of 130,000, and the United States to a 
nation of 76,000,000, and in consequence Mrs. 
Schenley gets a pension of $200,000 a year 
from the people of Allegheny City. 

"The essence of the matter is that 4,000 
Americans in Pittsburg and Allegheny pay to a 
woman living in London, England, $200,000 
a year for the privilege of building on ground 
in a city of their own country. Does she do 
any labor in return for what they send her? 
Oh no. She does not make the land, she does 
not build houses for them; she kindly permits 
them to live in their own country, and gets her 
lawyers to write them little receipts. On these 



114 THE IMPENDING CRISIS 

paper indulgences they cannot get fat; they 
cannot buy food and clothing and furniture 
with them, and thus start up trade and ex- 
changes. She is the master of 4,000 American 
serfs, who may imagine themselves free, but 
who, in fact, for two months in every year 
work and toil without any return to keep her 
in idle luxury in England." 

Commenting on alien landlordism in general 
in the United States this writer further says : 

"William Scully, who was one of the most 
notorious of the rack-renting and evicting Irish 
landlords, owns about 90,000 acres of the rich- 
est land in Illinois, besides large tracts in other 
States, from which he draws an income of 
$400,000 a year for kindly permitting several 
thousand American farmers to till the soil in 
their native country. He never builds a house 
or puts up a fence; his tenants must do that. 
He does not make the land either. The humble 
example of Captain Schenley has been imitated 
by hundreds, perhaps thousands, of foreign 
noblemen. The investments of Scully have 
been duplicated by such illustrious people as 
Queen Victoria, Emperor William, and the 
Czar of Russia. The result is that their ever- 
increasing rent roll for our own land amounts 
to over $200,000,000 per year. Some people 
imagine it a great thing for America that we 
export over $200,000,000 worth of products 



ALIEN LANDLORDISM AND ITS REMEDY 1 15 

more every year than we import, but the fact is 
that we have simply paid our ground rent, just 
as a tenant who may imagine himself doing a 
large business hauling off load after load of his 
products to pay his rent, for which the landlord 
renders him no service whatever." 

What is the remedy? It can only be cured 
by a change in our system of taxation. The 
change we propose is to take by taxation this 
rent that now goes into private pockets. As 
is shown in the case of the Schenleys as well 
as Scully and others, nothing is done by the 
landlord to produce the value he appropriates 
from those who labor upon and improve the 
land. That this land has rental value is due 
wholly to the fact that it is located in a popu- 
lous community. We hold as the ethical basis 
for property that to him who creates a thing or 
value to him belongs that thing or value. The 
Schenleys and Scullys did not create that 
enormous value which they annually appropri- 
ate to themselves. If, as is seen, the com- 
munity created the value, is it not proper and 
just that it should be taken by the community ? 
Can a better way than taxation be devised for 
taking this value ? In other words, would not 
a tax upon land values accomplish the desired 
result? We propose that all landlords pay to 
the Government the annual rental value of the 
land they hold. By taking this annual rent into 



Il6 THE IMPENDING CRISIS 

the public treasury and expending it for public 
purposes we make every one a sharer in that 
which he has helped to produce. This would 
stop the flow to foreign shores of $200,000,000 
worth of products annually for which we re- 
ceive no equivalent, and which comes out of the 
pockets of the American laborer ; not only that, 
but the hundreds of millions that now go into 
the pockets of American landlords and monop- 
olists would go for public benefit, and the mul- 
titude of taxes which are now saddled upon 
industry could be abolished. 

"How can industry thrive, business flourish 
and times be good, so long as we keep our tax- 
ing system upside down. When a mechanic 
builds himself a home, when a farmer builds a 
barn or makes any other improvement, our 
antiquated taxing system fines him for it year 
after year by increasing his taxes. What 
wrong has he done? He has employed the 
masons, the lumbermen, the carpenters, the 
hardware makers, the painters, etc. And for 
that, by our antiquated taxing system, he must 
be fined by an increase of tax; for he has em- 
ployed laborers and that might raise wages. 

"On the other hand, the speculator (who is 
also often a non-resident) keeps everybody from 
improving or working on his land ; he even lets 
the buildings rot down ; does not work the land 
himself, neither does he hire anybody, or permit 



ALIEN LANDLORDISM AND ITS REMEDY 117 

anybody to work on it except for ground rent 
or shares or its equivalent. What good has he 
done? He keeps land vacant and men idle. 
Is that right? No. But our same system 
rewards him by making his tax low; and even 
increases that reward by permitting him to sell 
that land at an advanced price, when other 
people at their own expense have brought up 
children to increase the population, and thus 
have increased the demand for that very land. 

"A tax on products of labor is shifted upon 
the consumer, and rolls up like a snowball, so 
that for every dollar that goes into the treasury 
the consumer pays three dollars as freight to 
get it there. An article that costs one dollar 
to make, when taxed fifty cents, is reckoned by 
the maker to cost him $1.50, and he charges a 
profit on that amount, not on the actual making 
price. The next man who handles it is com- 
pelled in turn to charge a profit on the entire 
amount the article cost him, which, of course, 
includes the tax. As most articles pass through 
half a dozen hands, the price is run up more 
and more, and the poor consumer, who is 
obliged to spend all his earnings for the sup- 
port of his family, pays from one-fourth to one- 
half of his wages in taxes and their accumula- 
tions through the increase of prices. 

"But some one might object that the farmer 
will pay all the taxes if the public funds are 



Il8 THE IMPENDING CRISIS 

raised by taxation of land values. Let us 
examine by the figures of the census of 1890. 
Ten million farmers and their families (45,- 
000,000 souls) occupy one-fifth of the land 
values, for although the farmers occupy great 
areas of land, that ground has comparatively 
small value. Three million city people and 
their families (15,000,000 souls) occupy four- 
fifths of the land values; for the city lots are 
worth more by the front foot than the farm 
lands by the whole acre. Yet between occupy- 
ing and owning there is a vast difference. The 
census shows that eighty- four per cent of the 
city people are tenants, and that thirty-two per 
cent of the farmers are tenants, while nineteen 
per cent more of the latter class are mortga- 
gors, so that only half of the farmers really 
ozvn their land, which is just one-tenth of the 
land value. 

"A quarter of a million of the city people and 
foreigners own the other nine-tenths, and they 
would have to pay as taxes that which they 
now keep as rent and which attracts so many 
foreign noblemen to marry American land- 
lords' daughters, in order to live on the sweat 
of the American farmer's brow. 

"Pitt, the celebrated English statesman, said 
that a large direct taxation would produce re- 
bellion, but that the government may tax the 
last bit of bread out of a poor man's mouth 



ALIEN LANDLORDISM AND ITS REMEDY 1 1 9 

and the last shirt off his back by indirect taxa- 
tion and he will only call it 'hard times.' Man 
being- endowed with the faculty of reason 
should use it. He gradually improves on the 
crude processes of dawning civilization. In 
the mechanical arts we have made improve- 
ments that border on the miraculous. When 
the American people see that want, misery and 
resultant crime are the products of a taxing 
system inherited from Europe, will they hesi- 
tate to make an improvement in this?" 



CHAPTER XI 

CONCLUSION 

"Prosperity!" If the points which I have 
tried to set forth be true, then by what author- 
ity do you flaunt this high-sounding word, this 
gilded lie, in the face of honest toil ? If to be 
prosperous means high rent, low wages and 
increased price of products, then our system of 
logic is sadly out of repair and our abuse of the 
king's English beyond forgiveness. If, on the 
contrary, "prosperity" means all that a priv- 
ileged few can take from the many without 
being suspected, then your claim is justified. 

This cry of "prosperity" is something like 
the cry of "overproduction." "Overproduc- 
tion !" What nonsense ! Have those who pro- 
duced the wealth all that they need for their 
happiness and comfort? If not, why not? So 
long as the law gives to the few the monopoly 
of the avenues of wealth, the inequality in its 
distribution will be more glaring with each 
successive generation. 

It was blind stupidity on the part of Edmond 
Burke when the French Revolution was in 



CONCLUSION 121 

progress to expect millions of Frenchmen, 
aroused to frenzy by centuries of misgovern- 
ment, to proceed by legal methods. The com- 
mon people had pleaded for justice for genera- 
tions, but their appeals fell upon deaf ears. 
The rights of the people had been violated; 
their homes had been invaded and the sacred 
traditions of their fathers thrown to the winds. 
The time for discussion had passed and the 
time for action had arrived. 

We see a direct analogy between the peasant 
of France and the toiler of America, between 
the brutal aristocrat of Louis XVI and the 
cold-blooded plutocrat of our own country. 
Political adepts deceive themselves when they 
think that the way to raise wages and make a 
people prosperous is to levy heavy taxes upon 
them. 

When we think of the innumerable schemes 
that are launched by those who are eager to 
get rich without working; of the millions of 
bogus stock that is annually thrown on the 
market and which is expected to pay dividends ; 
of the rattle-brain schemes of financiers to issue 
currency on commercial paper; of the numer- 
ous speculative associations that are springing 
up everywhere, all to rob productive industry, 
it is a source of the greatest wonder that the 
system is maintained one day. Before I close 
I will again say that we are on the verge of the 



122 THE IMPENDING CRISIS 

greatest financial crisis the modern world has 
ever seen, and its coming is being hastened by 
the policies that the politicians have been fol- 
lowing for the last generation. Why should 
we turn our backs upon questions which stare 
us in the face and which must be met and 
answered sooner or later? 

Our charitable instincts will not compensate 
for a deliberate denial of a law of nature. 

From a nation of home-owners we are 
rapidly sinking into a nation of tenants ; from 
a nation where individual honesty was the rule, 
into a nation where corporate greed is the 
power that makes the laws and determines pub- 
lic morals; from a nation of citizens into a 
nation of subjects; from a nation where hon- 
esty was king to a nation where money is king ; 
from a nation where religious conviction in- 
spired men to noble deeds to a nation where the 
priest is a hireling and his profession a trade ; 
from a nation of saving souls to a nation of 
saving money. These things almost stare us 
out of countenance and will not be set aside. 
It is not a true statement to say that because 
productive power has been increased the con- 
dition of the great mass of the people has in 
any way been alleviated. The means of pro- 
duction have undoubtedly been improved and 
man's productive power multiplied ten, fifty, 
one hundred, and in some cases perhaps a thou- 



CONCLUSION 123 

sand-fold. But it must be remembered that 
the demand upon the laborer has proportion- 
ately increased. In former times, when a 
man's productive power was, say five, the 
demand upon him was correspondingly five, 
and when his productive power was increased 
to twenty, the demand or exaction from him 
was likewise increased to twenty. So it has 
been in every department of industry. The 
demands made upon the laborer have increased 
in proportion to his ability to satisfy the de- 
mand. The enormous productive power which 
has been put into his hands has not been for 
him. He has not been allowed to retain the 
fruit of his labor, but he has been robbed of it 
by those who have done him the kindness to 
"permit him to work." "Permitted to work!" 
Just think of it! Here on God's earth, an 
earth intended for all the children of men, an 
earth of boundless resources, so large, so vast, 
and yet made so small by the artifice, by the 
caprice, and by the authority of men, millions 
of his children wander with not a home to call 
their own. 

You may practice your deceptions, you may 
endeavor to cram down the throat of labor such 
debasing doctrines as the "full dinner pail," 
but the fact nevertheless remains that the 
workers, the producers, do not get the wealth 
which they produce. The rich are getting 



124 THE IMPENDING CRISIS 

richer and the poor are getting poorer. The 
facts of existing conditions do not agree with 
the prosperity theory so eloquently expounded 
during the last Presidential campaign. Yet 
what can we expect from a political organiza- 
tion whose bosses are committed to the propa- 
gation of false doctrine? The banks control 
our finances and plunder the public treasury, 
the corporations dictate our legislation, the 
trusts have made a lobby of our National Con- 
gress, and all this to the eternal shame of the 
politicians. You have done no permanent 
good, you have accomplished nothing by mak- 
ing gold the standard of our currency. It mat- 
ters little what is the standard, so long as the 
law gives to a privileged few the monopoly of 
the means of production. 

In an age of despotism, superstition usurps 
the throne of reason, and the high priests of 
falsehood, ever ready with their "inspiration' ' 
and superior knowledge, will hesitate at noth- 
ing to maintain the existing order of things. 
Some must be profiting by the maintenance of 
injustice or it would not so long hold its 
ground. Statisticians tell us that the average 
daily production of wealth per person in the 
United States is about ten dollars, but that the 
average receipts of the working classes is about 
two dollars. Someone must get the other eight 
dollars. Who gets it? 



CONCLUSION 125 

We do not believe that the American people 
are such fools as the politicians believe. 
Must we continue to send to Europe to ask the 
crowned "know-nothings" how we should man- 
age our own affairs? It is time that we told 
the European banker to mind his own business, 
for there is no question of the ability of the 
American voter to work out his own destiny if 
he is but given the chance. 

There is no slavery like that of the mind. It 
is often said that such and such a man possesses 
great wealth, when it could be more truthfully 
said that the wealth possesses the man. The 
fear of poverty enslaves us all, and generates in 
the minds of some the insatiable desire to get 
more and more wealth. Between the millionaire 
on the one hand and the tramp on the other there 
is a difference which the reason refuses to ac- 
cept as nature's provision; a difference which, 
like a cloud, hovers over civilization to-day 
threatening to engulf it in ruin. The grinding 
process of industrial slavery, the cry of the 
widow and the orphan, the groans of the 
oppressed, all this, contrasted with the cruel 
selfishness of the rich, makes society an incom- 
prehensible anomaly of order and disorder. 

We appeal to your sense of right; we appeal 
to your sense of justice; we appeal to those 
in whose brains the spark of reason yet burns 
and needs but the breath of a little truth to fan 



126 THE IMPENDING CRISIS 

it into a flame of fervor and enthusiasm. 
Behind the mere semblance of things there is 
the eternal reality. It is Deity itself, untram- 
melled by sense, unknown except by the light 
of truth. Man's chief business in this world 
is to bear witness unto the truth, for therein 
rests his only salvation. 

"To thine own self be true, and it must follow, as the 
night the day, thou canst not then be false to any 
man." 

We deceive ourselves when we think that we 
can make a compromise between right and 
wrong, for justice permits no such compromise. 

A great deal has been said about the danger 
of admitting these new ideas into our politics 
and of the advisability of reorganizing along 
the old lines. This "Old Line Democracy" — 
what is it but the ghost, the phantom of politi- 
cal freedom ? What has it done since the Civil 
War toward the emancipation of American 
labor ? Had it not been for the lack of faith in 
government by the people on the part of these 
antiquated political doctrinaires, we would not 
have suffered defeat in two successive Presiden- 
tial campaigns. Must we modify our princi- 
ples and make them of little effect in order to 
invite these traitors into fellowship again? 
Let those so-called Democrats who think that 
they can destroy the Temple of Democracy and 



CONCLUSION 127 

rebuild it in three days think seriously upon the 
question, and if no remorse of conscience strike 
them, then confess Republicanism and call 
themselves Republicans, which to all intents 
and purposes they really are. We need hope 
for nothing from the Old Democracy, for it is 
dead, since the defeat of 1900, and its future 
has been buried in the past. Let the slothful 
element of the Bourbons go over to their right- 
ful masters in the Republican Party, and then 
they shall know themselves as others know 
them. To label a man a Democrat does not 
make him a Democrat any more than the put- 
ting of a whisky label on a bottle of vinegar 
will change the contents into whisky. We will 
kill no fatted calf and will ask no favors of those 
Nestors of the old Democracy, except to mind 
their own business and let the growth of the 
New Democracy go on — as we well know it 
must go on. The Democratic Party must 
stand united on some rational proposition for 
social improvement and not allow itself to be 
divorced from the great masses of the people 
by a slavish submission to Plutocracy and 
Bossism. 

There comes a time in the history of every 
nation when accumulated wrong must find its 
expression in some form or other. The beg- 
gar, the tramp, the sweat-shop, prison and 
almshouse, which stand to-day as living monu- 



128 THE IMPENDING CRISIS 

ments of industrial slavery and the accumu- 
lated wrong of centuries, would disappear with 
freedom of opportunity for labor to employ it- 
self. Behold in society to-day the hideous 
spectacle of vice paraded under the name of 
virtue, and of an organized hypocrisy main- 
tained by a system of bribery and fraud ; while 
in high places sit those whose only claim to dis- 
tinction is their utter subserviency to the 
powers that be. 

Free land, free trade, free men — this is the 
trinity, the basis of all future political phil- 
osophy. With it nations, like men, "may rise 
on stepping stones of their dead selves to 
higher things." The fatherhood of God and 
the brotherhood of man may then reasonably 
be hoped for. Without it, we will sink hope- 
lessly into those conditions in which the effete 
monarchies of the old world have struggled, 
and struggled in vain. The arrogance of the 
few possessing all; the division of the people 
into classes; the contempt on the part of the 
few for the rights of the many — these things 
conspiring to produce social decay, will make 
the perpetuation of a republic an impossibility. 

"When political economy shall have done her 
work on earth, and taught men how to evolve 
the maximum of material good, and when 
equity shall have taught men to construct 
society in accordance with the principles of jus- 



CONCLUSION 129 

tice, the reason of mankind will still go onward, 
and the higher and nobler good, the aspiration 
after immortality, will still beckon on human- 
ity; and earth, transformed by truth harmon- 
iously reverberating from nature to reason, and 
frcm reason to revelation, shall at last rejoice 
in the universal knowledge of Him whose king- 
dom is everlasting." 



1904 



